信实工业（RELI.BO）：信实工业（信实印度）：买入正在好转；新业务在望

EquitiesOil & Gas Buy:Turnaroundenroute; new business in sight India ◆4Qearnings surprised positively on higher-than-expected retail,digitaland O2C performance;E&P disappointeda bit MAINTAIN BUY TARGET PRICE(INR)PREVIOUS TARGET(INR)1580.001590.00 ◆Retailisturning around, air fibre has picked up pace,and O2Chas demonstrated its resilience ◆MaintainBuyratingwithminortweaktotargetpriceatINR1,580(INR1,590previously) SHARE PRICE(INR)UPSIDE/DOWNSIDE1300.40+21.5% RIL starts to deliverpositiveearnings surprise.In report titled “Upgrade to Buy:Catalysts in sight”, 17 January 2025,we upgraded RIL to Buy after four years citingpotentialcatalystsin the form of a turnaround of retail, the start of the new energybusiness and a pick-up in momentumin the digital business. We are beginning to seeearly signs of these manifestedin earnings. RIL reported higher-than-expected PATof INR194bn for 4QFY25. It reported EBITDA of INR438bnwithgrowth of 3%yoydespite a tough quarter fortheO2C business. This was largely aided by 18%yoyEBITDA growth in digital and 14%yoygrowthin retail,both higher than ourexpectations for the quarter. O2C EBITDA fell 10%yoy but wasup by5%qoq,againhigher than expectation.PAT also benefited from higher other income, lower effectivetax rate. Net debt remained largely unchanged on QoQ at INR1.17 trilliondespite a12%qoq increase in capex in 4Q,taking the full-year capex to INR1.31 trillion. Key takeaways from analyst meet.RIL attributedthebetter performancein O2Ctofeedstockand productoptimisation and domestic placement of fuel through Jio-BP.Italso indicated its focus on ramping up domestic fuel sales. It also highlightedexpansion projects for PSF, PTA and PVC which are now expected to commission byFY27.Onthedigital side,subscriber growth came in nicely at 6.1m and air fibresubscribers also inched upto 5.6m.Ithasaddedc90% of new subscribers on fibrewireless access side using both 5G and UBR technology,which is allowing fasterexecution.Companyhas now capitalised 5G capex which shouldbereflectedindepreciation impact from FY26.On retail,thecompany indicated that it has finishedstreamlining the business with net store additions of238. Fashion and lifestylesegment is now experiencingpositivelike-for-like growth. It has launched ‘Under 30min” offering on grocery side to compete with quick commerce,reaching4,000pincodes. It has now launched its venture with Shein on fast fashion. E&P has nowstarted experiencinganatural decline in its KG basin field butthecompany isundertaking multiple interventions to arrest the decline. It also indicated lower capexintensityforthe business fortheupcoming year. Onnew energy,thecompany nowexpectstocommissionits integratedsolar module capacity of 10GW in CY25/FY26.As per company.work on battery and electrolyser manufacturing is also progressing. Puneet Gulati*, CFAAnalyst, India Energy Transition, Property & InfraHSBC Securities and Capital Markets (India) Private Limitedpuneetgulati@hsbc.co.in+91 82 9189 7591 Saurabh Jain*Analyst, India Materials and EnergyHSBC Securities and Capital Markets (India) Private Limitedsaurabh2jain@hsbc.co.in+91 22 6164 0691 Evan Li*Head, Asia Energy Transition ResearchThe Hongkong and Shanghai Banking Corporation Limitedevan.m.h.li@hsbc.com.hk+852 2996 6619 MaintainBuywithminortweaktotargetpriceatINR1,580 (fromINR1,590): OurEPS estimates for FY26-27 see minor changesas we incorporate 4QFY25 results.Ourtarget price implies 21.5% upside;hence,wemaintainourBuyrating. Keydownsiderisks: (1) slowdown in urban consumption; (2) delayed launch plan forthenew energybusiness; (3) delayed monetisation or value discovery forthedigital business. * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulations From‘neutral-land’withlove| The19thedition of the EMSentiment SurveyClick to view Issuer of report:HSBC Securities and CapitalMarkets (India) Private Limited Disclosures & DisclaimerThis report must be read with thedisclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it. View HSBC Global Research at:https://www.research.hsbc.com Financials & valuation:Reliance Industries Ourinvestmentview Overthelast two years, we believed that RIL’s businesses were adequately valued while thecatalystsfor both material earnings increase, or valuation expansion,weremissing. RIL alsodisappointed due toweaker-than-expected performance of retail, slower-than-expected pace oframp-up andnew business development ofthedigital businesses. Further, weakness indemand from China,thepotential threatofrapid penetration of electric vehicles,andrefiningand petrochemical capacity commissioning intheMiddle East and China had continued to keeprefining and petrochemical product spreads in check. Also, whilethenew energy business heldsomepromise, profitability was aquestion markgiven low module prices which werehurtingprospective profitability. Onthecash flo