RIL Q1 net profit drops 5.5% on weak showing by oil-to-chemicals biz

Misses Q1 earnings estimates despite gains in consumer, upstream segments

Oil-to-telecom conglomerate Reliance Industries Limited (RIL) reported a 5.5 per cent year-on-year (Y-o-Y) decline in consolidated profit (attributable to the owners) to Rs 15,138 crore for the April-June period (Q1) of 2024-25. This, the company said, was a result of weakness in its oil-to-chemicals (O2C) division and higher depreciation costs, offsetting gains in the consumer (retail and telecom) and oil & gas upstream businesses.

This marks the second consecutive quarter of profit decline, with net profit declining in three of the past five quarters. RIL’s Q1FY25 earnings also missed Street estimates.

Revenue for the quarter under review stood at Rs 2.32 trillion, up 11.7 per cent year-on-year, driven by higher oil prices and growth in consumer businesses. Consolidated profit before interest, depreciation, and taxes (PBIDT) saw a 2 per cent Y-o-Y growth, reaching Rs 42,749 crore.

 

In a Bloomberg poll, 13 analysts had estimated revenue of Rs 2.32 trillion and seven analysts estimated a net income (profit) adjusted of Rs 17,416 crore.

Mukesh Ambani, chairman and managing director, RIL, said: “Consolidated Ebitda (earnings before interest, taxes, depreciation, and amortisation) for the quarter improved from a year ago with strong contributions from the consumer and upstream businesses offsetting the weak O2C operating environment. Reliance’s resilient operating and financial performance in this quarter underscores the strength of its diverse portfolio of businesses.”

The reported profit after tax in Q1FY25 was Rs 17,448 crore, down 4 per cent Y-o-Y.

Revenue growth was driven by higher oil and product prices in the O2C segment and robust volume growth in the oil and gas division. Other income increased by 4.5 per cent to Rs 3,983 crore from the previous year.

Sequentially, consolidated net profit fell by 20 per cent, and revenue decreased by 2 per cent.

Earnings from the O2C business were impacted by global volatility in energy markets. The O2C division, which includes refining, petrochemicals, and fuel retailing segments, reported quarterly Ebitda at Rs 13,093 crore, a 14.3 per cent Y-o-Y decline. The decline was due to weaker transportation fuel cracks, chemical margins, and polyester chain deltas, the company said.

“(Since) the past eight quarters, Ebitda (for O2C) has been ranging between Rs 12,000 crore and Rs 20,000 crore,” said Srikanth Venkatachari, chief financial officer, RIL, highlighting the volatility for the O2C business. The company’s presentation noted that earnings in this segment were affected by subdued global demand in well-supplied markets, geopolitical factors, Red Sea transit disruptions, weather, outages, and new refining capacities.

Ebitda for the oil and gas division (which undertakes exploration and production) stood at Rs 5,210 crore, up 29.8 per cent Y-o-Y, with revenue rising by 33 per cent to Rs 6,179 crore. PAT for the telecom business, Jio Platforms, increased by 11.7 per cent Y-o-Y to Rs 5,698 crore — a record, according to the company.

The telecom division’s revenue grew by 12.8 per cent to Rs 34,548 crore. The retail business reported a PAT of Rs 2,549 crore, up 4 per cent from the previous year, and revenue of Rs 75,615 crore, up 8.1 per cent.

As of June 2024, RIL’s net debt stood at Rs 1.12 trillion, with consolidated gross debt at Rs 3.04 trillion, down from Rs 3.18 trillion a year ago. Capital expenditure for the quarter was Rs 28,785 crore.

Depreciation for the June quarter rose by 15.5 per cent Y-o-Y to Rs 13,596 crore, driven by an expanded asset base across all businesses, higher network utilisation in the digital services business, increased retail store count, and ramp-up in upstream production.

Commenting on the new energy business, Ambani stated, "Reliance has made significant progress on the implementation of New Energy Gigafactories,” without specifying a commissioning timeline.