How the Jio division performed?

In the last few quarters, Jio has been a big driver of EBITDA growth at Reliance. In Q3, EBITDA of Jio Platforms division crossed Rs.10,000 crore for first time. In the current quarter, the EBITDA of Jio has been at the closest to the O2C unit. With ARPUs above Rs.151.60, EBITDA margins of over 46% and over 42 crore subscribers, Jio has clearly emerged as the biggest driver of future growth in profits for Reliance Industries group. 

Retail is driving top line

Like in the last few quarters, it is Retail that is driving the top line thrust of the group. With revenues nearing Rs.60,000 crore, retail is now almost half as large as the O2C business in terms of size. This is excluding the Future deal, which is still hanging fire. After a long battle, the Reliance Retail business has also announced steady EBITDA and profit numbers. Of course, the EBITDA margin of the retail business is way below that of Jio Platforms, but it is doing a great job in driving volumes and bringing in the customers. In a nutshell if Jio has been the driver of EBITDA in Q3, Retail has been the big driver of top line. But what will drive the growth of RIL value? 

A quick look at O2C business

In terms of top line, O2C business, the oil to chemicals franchise, contributes 60% of the top line. However, it is too vulnerable to the vagaries of crude price and the forces of demand and supply. The O2C EBITDA margins at 10.3% are way below that of Jio and somewhat better than the retail business. For now, the O2C business remains the cash cow for the Reliance group and that is not going to change. With crude prices at $87/bbl and robust GRM (gross refining margins) in double digits, this business is likely to hold the cash flow sway. But O2C is clearly losing clout in terms of profitability, margins and valuations. 

Green O2C will be the driver

The Reliance group has committed billions of dollars to green O2C, which includes solar energy, green hydrogen, EV ecosystem, batteries, emerging ideas etc. That is where the big valuation and margin game is likely to play out for Reliance in the next few years. Over the last 25 years, Reliance has always been ahead of the curve. Be it in backward integration, petchem cycle, refining scale, retail, digital or in effecting the shift to green energy; RIL has set the trend. Both retail and digital have played a big part in driving valuations for Reliance in the last 6 years and they are likely to move to stability zone in the future. Now, it is over to green energy to do the value driving for Reliance.