Jio Platforms Q2 Results Preview: Revenue, EBITDA Seen Steady; Will Telco Drive Reliance's Growth?

Behemoth, Reliance Industries (RIL) is set to declare its September quarter earnings for FY24 on Friday. Not just that, RIL's major subsidiaries Jio Platforms and Reliance Retail will also present their Q2FY24. Both subsidiaries hold domination in the telecom and retail market of India. Coming to the telecom arm, Jio is expected to have healthy growth in both revenue and EBITDA. While its Q2 APRU has been factored to around Rs 184, up by nearly 2% sequentially.

In their preview note, analysts at Prabhudas Lilladher said, "We expect JIO to report Revenue/EBIDTA of Rs 248.5 billion (+ 3.4% QoQ)/Rs 133.1 billion (+5.8% QoQ). We have also factored in ARPU of Rs184 (+1.9%QoQ) and subscriber addition of 3.5 million in Q2 (9.2 million in Q1)."

Jio's ARPU is seen to record a marginally higher growth compared to its rival Bharti Airtel and is expected to report a 1.5% growth QoQ in ARPU to Rs 203.

In terms of subscribers, overall customers is likely to continue to be higher in Jio at a total of 452 million compared to Airtel which is expected to record a subscribers of 341.6 million for the quarter.

While B&K Securities note said, "JIO shall continue its trend of subscriber addition led revenue growth. We foresee a 1.6% increase in ARPU on a QoQ basis. " It added, " Jio will continue to ace the subscriber count battle. Incremental margins will likely be in the ~60% range for Airtel and ~52% for Jio."

Between April to June 2023 quarter, Jio reported record quarterly revenue of Rs 30,640 crore, up by 11.3% YoY, while EBITDA was also at record Rs 13,116 crore, surging by 14.8% YoY. Operating revenue growth was driven by subscriber gains in connectivity business and scale-up of digital services.

Further, in Q1FY24, Jio continued to lead the industry's net subscriber addition with 9.2 million adds in 1Q FY24. Monthly churn also reduced to 1.8% during the quarter. ARPU stood at Rs 180.5, increasing by 2.8% Y-o-Y driven by better subscriber mix and ramp-up of wireline business. Lastly, 5G adoption and FTTH ramp-up drive strong 28.3% Y-o-Y growth in data usage as monthly data traffic on the Jio network crosses 11 Exabytes during 1Q FY24.

Jio's growth in Q2FY24 will be among the driving factors for Reliance's earnings in the quarter. Prabhudas another report said, "We estimate refining throughput of 17.0mmtpa. Petchem profitability will decline QoQ, however refining margins are likely to improve amid a rise in benchmark GRMs. We expect Jio to show steady performance (3.4%QoQ revenue growth and 1.9% QoQ ARPU hike), while retail segment profitability should be
resilient."

During the Q2 announcements, Shreyansh Shah, Research Analyst, StoxBox said their focus is on the strategy the company is planning for its pan-India 5G rollout.

Shah said, "We expect Reliance Industries to post a stable set of numbers in Q2FY24. The operating margins may improve, mainly aided by its technology and consumption-led businesses. Also, the oil-to-chemicals conglomerate is gradually focusing on renewable sources, which will drive the company's future course. The margins from its petrochemical business are expected to be stable as the quarter had some breather in oil and gas prices. In this quarter, the conglomerate's show-stopper would be the company's retail segment which has shown massive growth in the past few quarters and is expected to continue the momentum."

He added, "With the capex cycle already in place, we do not expect any major uptick in the medium term, and our focus would be more on the strategy the company is planning for its pan-India 5G rollout."

Mukesh Ambanu's comments on Friday will be keenly watched.

Ahead of the Q2 earnings, RIL's share price traded at Rs 2,268.75 apiece, up by 1.91% on BSE. RIL is the largest company in India in terms of market share with an m-cap of nearly Rs 15.35 lakh crore.

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