MUMBAI: The country’s largest corporate Reliance Industries, which is the first company to cross the Rs 10 trillion mark in topline and Rs 1 trillion mark in pretax profit in FY24, is likely to see its pre-tax profit halving to 8 percent this fiscal from 16.1 percent in FY24 but jumping to 14 percent in FY26 on falling capex amidst rising cash flows, Fitch Ratings has said.
In FY24, the company reported a record consolidated topline of Rs 1,000,122 crore or $119.9 billion, which was 2.6 percent up on-year and a consolidated Ebitda of Rs 178,677 crore or $21.4 billion, up 16.1 percent on-year and an annual pretax profit of Rs 1,04,727 crore or $12.6 billion, which was 11.4 percent more than the previous year’s.
Increasing cash flows and lower capex will have the net leverage likely remaining below 1x in the medium term, supported by increasing cash flows and lower capex intensity, even as the conglomerate’s absolute capex and investments remain high in the near term, says the agency.
“We expect RIL’s Ebitda to increase by 8 percent on-year FY25 and nearly double in FY26 with a 14 percent jump, while capex intensity which is capex to revenue, is likely to come down below 13 percent by FY26 from 15.3 percent in FY24. Lower capex intensity will be driven by growing revenue and reduction in capex after FY25,” the agency said.
The agency expects the pre-tax growth to be led in percentage terms by the retail arm with a 20-25 percent jump followed by those from digital services, largely telecom, with a 10-15 percent and those from the cash cow oil and petchem or O2C segment to remain above Rs 60,000 crore in FY25, down from Rs 62,400 crore in FY24, as it expects gradual improvement in petrochemical spreads from FY24 lows as a supply overhang recedes.
The agency expects cash flow from operations to be sufficient to fund its capex from FY26, which will limit additional debt funding and keep its pretax profit leverage below 1x in the medium term, which was 0.9x in FY24 and 1.1x in FY23. It also expects RIL’s net debt to turn neutral to positive by FY26 from negative 14.1 percent in FY24 and 26.4 percent in FY23.
The company had raised Rs 20,900 crore in equity mainly from the sale of a stake in a subsidiary, even as its capex remained high at Rs 1.5 trillion in FY24 and Rs 1.4 trillion in FY23.
