RIL Q2 results: Net profit slips 5% to Rs 16,563 crore on weak fuel biz

Declines for third quarter in a row; misses Street estimates again

Oil-to-telecom conglomerate Reliance Industries Ltd (RIL) reported a 4.8 per cent year-on-year (Y-o-Y) decline in consolidated profit (attributable to the owners) at Rs 16,563 crore for the July-September quarter (Q2) of 2024-25, missing analysts' expectations by a wide margin. Revenues, too, disappointed.

This marks the third straight quarter of declining profits on a Y-o-Y basis, of which the last two were primarily due to its weak oil-to-chemicals (O2C) business. This is for the sixth quarter in a row the firm has missed the brokeages’ forecast, according to Bloomberg. Had it not been for the consumer businesses and a surge in other income, the performance would have been even worse.

 

“Reliance once again demonstrated the resilience of its diversified business portfolio. Robust growth in digital services and upstream business helped partially offset the weak performance in O2C, which was impacted by unfavourable global demand-supply dynamics,” said RIL Chairman and Managing Director Mukesh Ambani. He announced that the first of the company’s new energy giga-factories is on track to begin production of solar PV modules by the end of this year.

A Bloomberg poll of 13 analysts had projected revenue at Rs 2.34 trillion, while four analysts estimated a net income (profit) adjusted of Rs 18,814 crore.

However, RIL’s consolidated revenue for Q2 came in at Rs 2.31 trillion, marginally lower than a year ago. The O2C business saw revenue growth due to higher volumes and increased domestic placement of products, but revenue from the retail business declined 3.5 per cent Y-o-Y.

The oil and gas division saw a 6 per cent drop in revenue from a year earlier. RIL’s other income also rose 26.9 per cent to Rs 4,876 crore in the same period.

The company’s consolidated profit before interest, depreciation, and taxes (PBIDT) declined 2 per cent Y-o-Y to Rs 43,934 crore. Reported profit after tax for Q2 FY25 stood at Rs 19,101 crore, down 3.6 per cent from the previous year, according to a press release by RIL.

Sequentially, RIL’s consolidated net profit rose 9.4 per cent, while revenue remained flat.

On a standalone basis, RIL’s revenue was down 2.5 per cent to Rs 1.33 trillion Y-o-Y and net profit declined 31.2 per cent to Rs 7,713 crore.

Segment-wise, RIL’s O2C business posted a 5.1 per cent increase in revenue Y-o-Y at Rs 1.55 trillion, but Ebitda for the segment dropped 23 per cent to Rs 12,413 crore, with a 300 basis point reduction in Ebitda margins.

Company executives said weak O2C business weighed on strong growth in the digital and upstream segment. The decline was driven by a sharp fall in product margins, with fuel cracks falling nearly 50 per cent Y-o-Y.

“Downstream chemicals also declined with muted global demand in a well-supplied market. RIL benefited due to superior ethane cracking economics, driven by a sharp fall in ethane prices,” the release said. Exports from the O2C division were down 15.7 per cent to Rs 70,631 crore.

Jio Platforms reported an 18 per cent Y-o-Y increase in revenue, while PBDIT grew by 17.8 per cent to Rs 15,931 crore.

The retail business saw revenue from operations fall 3.5 per cent Y-o-Y to Rs 66,502 crore. Its profit grew 5.2 per cent to Rs 2,935 crore in the same period.

RIL’s net debt as of September 2024 stood at Rs 1.16 trillion, with consolidated gross debt at Rs 3.36 trillion, up from Rs 2.95 trillion a year ago. However, net debt-to-Ebitda was steady at 0.66 times, both sequentially and Y-o-Y. Capital expenditure for the quarter was Rs 34,022 crore.

RIL Chief Financial Officer V Srikanth said the capex was fully covered through cash profits. There had been a significant decline in Jio capex, while the FY25 capex so far was higher on O2C and new energy businesses, Srikanth said, adding that escalation in geopolitical conflicts and a possible change in Opec+ cuts policy would keep crude prices volatile.