Reliance Ind Q2 net dips 4.8% as ‘slow’ O2C offsets digital rise

Reliance Industries reported a 4.8 per cent annual fall in consolidated net profit in Q2 of FY25 at ₹16,563 crore, while revenue growth was flat at ₹2.4 lakh crore, the growth in digital services offset by weakness in petchem as well as subdued consumer demand, that affected retail performance.

On a sequential basis net profit was 9.4 per cent higher and revenue growth flat.

Consolidated EBITDA at ₹43,934 crore saw a 2 per cent decline, dragged down by the O2C business.

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The segmental break-up shows retail business revenue fell 1.1 per cent to ₹76,325 crore, while the revenue of the oil-to-chemicals business grew to ₹1.56 lakh crore as against the ₹1.48 lakh crore posted a year ago.

Revenue from digital services rose 16.5 per cent annually to ₹38,055 crore, while on a sequential basis it was 7.3 per cent higher. For Jio Platforms, the average revenue per user in Q2 was 7.4 per cent higher at ₹195.1, higher than street expectations.

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As expected the O2C EBITDA fell 23.7 per cent to ₹12,413 crore. Retail EBITDA was almost flat at ₹5,861 crore, while that of digital services rose nearly 15 per cent to ₹16,139 crore.

The company said the O2C business revenue had improved with higher volumes and increased domestic placement of products. The conglomerate’s capex during the quarter Rs 34,022 crore and net debt at the end of the quarter was Rs 1.16 lakh crore.

Commenting on the new energy business, which is a big focus for the company in the future, Chairman and Managing Director Mukesh Ambani said that the first of its giga factories was on track to start production of solar PV modules by the end of the year. “With a comprehensive range of renewable solutions including solar, energy storage systems, green hydrogen, bio-energy and wind, the New Energy business is poised to become a significant contributor to global clean energy transition,” he said.

O2C, oil and gas

A sharp decline in product margins, muted global demand in a well-supplied market led to O2C EBITDA fall, the company said. There were corrections in margins across key products, while fuel cracks fell sharply from the elevated levels seen year ago. The company said that downstream chemical deltas were under pressure due to the weak recovery in global demand.

RIL benefited from a sharp fall in ethane prices as well as its better ethane cracking economies.

Lower gas price realisations led to 6 per cent lower revenue in the oil and gas segment. But the segment EBITDA rose 11 per cent due to sustained volume growth and a one-time provisioning.

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Digital services revenue increased with the impact of revised telecom tariffs for mobility services and scale-up of homes and digital services businesses.

EBITDA for Jio Platforms increased due to better subscriber mix, digital services scale-up and revision in telecom tariffs. EBITDA margin for Reliance Retail Ventures Limited (RRVL) improved by 30 bps with continued focus on streamlining of operations and calibrated approach in B2B.

For Reliance Jio, the full impact of the tariff hikes that took place towards the end of June is expected to flow through in future quarters.

The retail business had a tepid outing in the quarter, hit by poor discretionary spending especially in the fashion and lifestyle segment. The performance was also affected by the streamlining of operations and its spend on B2B to improve margins.

The company is building up JioBrain, an industry agnostic artificial intelligence platform that will connect all the businesses in the group in a seamless way for better delivery of services.