Research Report: Reliance Industry

Reliance Jio is a leading telecommunications company in India, offering a wide range of services including 4G and 5G broadband, mobile telephony, and digital services. The company, a subsidiary of Reliance Industries, was launched in September 2016 and has since grown to become one of the major players in the Indian telecom industry. Reliance Jio has been expanding its services across the country, with 5G service now available across more than 2,500 cities in India. The company owns spectrum in various frequency bands and has a network of over 250,000 km of fiber optic cables in the country.

About Us:

Reliance Jio is a leading telecommunications company in India, offering a wide range of services including 4G and 5G broadband, mobile telephony, and digital services. The company, a subsidiary of Reliance Industries, was launched in September 2016 and has since grown to become one of the major players in the Indian telecom industry.

Reliance Jio has been expanding its services across the country, with 5G service now available across more than 2,500 cities in India. The company owns spectrum in various frequency bands and has a network of over 250,000 km of fiber optic cables in the country.

In addition to its telecom services, Reliance Jio has also ventured into other areas. It has launched a range of consumer platforms, including JioTV for live TV streaming, JioCinema for video-on-demand, and JioSaavn for online music streaming. The company also offers a suite of digital services through its Jio Apps, including a messaging app, a video-conferencing platform, and a digital payments app.

Reliance Jio has also made several strategic partnerships to enhance its services and reach. These include a joint venture with satellite operator SES to deliver high-capacity broadband services using SES's high-throughput geostationary satellite and partnerships with companies like Microsoft to leverage cloud infrastructure for developing innovative solutions.

The company has faced some challenges, including disputes with incumbent telecom operators and a farmers' boycott during the 2020–2021 Indian Farmers' Protest. However, despite these challenges, Reliance Jio continues to be a significant player in the Indian telecom industry and digital services sector.

Management and Leadership Team:

Reliance Jio's management team is led by Sanjay Sharma, who serves as the Chief Technology Officer (CTO). He is joined by Rohit Roy, who holds the position of Head of Marketing. Somayajulu is also a part of the team as the second CTO. These key members of the management team play pivotal roles in shaping the strategic direction of the company.

As of the latest information available, the current President of Jio is Vikas Choudhury.

The management team at Reliance Jio is responsible for overseeing various aspects of the company, including technological innovation, marketing strategies, and overall business operations. They ensure that the company is able to deliver high-quality services to its customers and continue to expand its reach and influence in the telecom industry.

The management team at Reliance Jio also plays a crucial role in the company's strategic partnerships and initiatives. For example, the team led the development and rollout of 5G services, which is a significant milestone for the company and a significant step forward in its mission to provide advanced telecommunications services to its customers.

Reliance Jio's management team is composed of experienced professionals with a deep understanding of the telecom industry and digital technology. They are instrumental in driving the company's growth and success, and their leadership is a key factor in the company's position as a leading player in the Indian telecom industry.

SHAREHOLDING PATTERN

FINANCIALS

Financial Q2 Results:

Reliance Jio's financial report for the second quarter of FY 2024 shows significant growth in both revenue and profit. The company's revenue is expected to rise by 3.4% to reach ₹24,850 crore in the second quarter of the fiscal year 2024.

The profit is projected to increase by 3% sequentially to ₹5,010 crore, compared to ₹4,863 crore in the last quarter. Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) is expected to be at ₹13,115 crore, with a margin of 52.8%.

Analysts estimate that Jio might have added 10 million subscribers in the second quarter, compared to 448.5 million in the previous quarter. Additionally, the average revenue per user (ARPU) in the quarter ending September 30, 2023, is projected at ₹182.5, indicating a 1% growth from the previous quarter’s ₹180.5.

In terms of Jio Financial Services, the company reported a 101.2% increase in profit after tax (PAT) in the second quarter of 2024. The revenue also increased by 46.9% year-over-year (YoY).These financial results demonstrate the company's strong performance and growth in the second quarter of FY 2024.

The second quarter results of Jio Financial have seen a substantial increase in both profit and revenue. The company's consolidated profit after tax (PAT) has more than doubled compared to the previous quarter, reaching Rs 668 crore. This represents a sequential increase of 100%.

In terms of revenue, there has been a significant growth of 47%, marking a substantial improvement over the previous quarter.

These financial results indicate a strong performance by Jio Financial in the second quarter of the fiscal year. The company's ability to increase its profit and revenue sequentially demonstrates its resilience and growth potential.

Mukesh Ambani, as the Chairman and Managing Director of Reliance Industries Limited, has stated, "Reliance Retail has been accelerating its expansion both in offline and online sectors. We are continuously enhancing our product portfolio and offerings. We aim to provide a refreshing and user-friendly shopping experience across our integrated ecosystem. The robust performance of our retail business model, characterized by its strength and diversity, has been consistently impressive.

Risk factors:

Reliance Jio, like any other company, faces a variety of risk factors in its operations. Here are some of the key risks that the company might face for the fiscal year 2023–24:

• Regulatory Risks: As a telecom company, Reliance Jio is subject to various regulations and policies set by the government. Any changes in these regulations can significantly impact the company's operations and profitability. For instance, changes in telecom tariffs, spectrum allocation, or data privacy regulations can affect the company's business model and financial performance.

• Competitive Risks: The telecom industry is highly competitive. Any new entrants or increased competition from existing players can affect Reliance Jio's market share and profitability. The company needs to continuously innovate and improve its services to stay competitive.

• Operational Risks: These are risks related to the company's day-to-day operations. For example, network disruptions, equipment failures, or issues with customer service can negatively impact the company's reputation and customer satisfaction. These risks can also lead to increased costs and reduced profitability.

• Financial Risks: These are risks related to the company's financial performance and stability. For instance, the company's financial performance depends on its ability to generate sufficient revenue and control its expenses. Any increase in expenses, such as higher spectrum fees or increased operational costs, can affect the company's profitability.

• Economic Risks: These are risks related to the overall economic environment. For example, economic downturns, inflation, or changes in interest rates can affect the company's financial performance and profitability. Additionally, economic uncertainties can also impact the spending habits of consumers, affecting the demand for telecom services.

VALUATION

Reliance Jio has successfully launched India's first satellite-based gigabit broadband service, named JioSpaceFiber, aimed at bringing high-speed internet connectivity to the most remote areas of the country.

The service has been showcased at the India Mobile Congress and is set to offer nationwide coverage at competitive rates. JioSpaceFiber is part of Reliance Jio's broader efforts to enhance digital inclusivity, joining their existing broadband offerings, JioFiber and JioAirFiber.

Reliance Jio has collaborated with SES to utilize medium earth orbit (MEO) satellite technology, providing gigabit internet services akin to fiber-like services directly from space. This initiative aims to provide dependable, low-latency, high-speed internet and entertainment services to consumers and businesses, irrespective of their geographical location.

The service has already been tested and connected to four of India's most remote locations, including Gir in Gujarat, Korba in Chhattisgarh, Nabrangpur in Odisha, and ONGC-Jorhat in Assam. This initiative marks a significant step towards empowering digital India and connecting millions of homes and businesses that have not yet been connected to broadband internet.

Source: Company Website, Stocx

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