Reliance Industries Limited (RIL), led by billionaire Mukesh Ambani, is set to announce its Q2 FY25 results today, October 14, 2024. The conglomerate, with interests spanning from oil to telecom, is likely to report muted growth in the July-September quarter due to challenges in its oil-to-chemicals (O2C) and retail segments. Investors and analysts are keenly awaiting the results to gauge the company’s performance across its diverse business verticals.
Reliance Q2 Earnings Preview: What to Expect
Analysts expect RIL to report consolidated revenue growth of 3.3% in Q2FY25, rising from ₹2.31 lakh crore in Q1FY25 to approximately ₹2.39 lakh crore in Q2FY25. Although a slight increase in revenue is forecasted, concerns over the company’s profitability remain, with net profit and EBITDA expected to show only marginal quarter-on-quarter (QoQ) growth.
At the company’s Annual General Meeting (AGM) in August 2024, the board approved a 1:1 bonus share issue, adding to investor enthusiasm. However, as of today, RIL’s stock price is trading relatively flat, reflecting market caution ahead of the Q2 results.
Retail Segment: Flat Growth Expected
The retail arm of Reliance, a significant revenue driver, is expected to report only a 0.6% QoQ EBITDA growth, with EBITDA projected at ₹5,700 crore. Analysts attribute this sluggish growth to factors such as store rationalization and the impact of the heavy monsoon across India.
Despite the temporary challenges, Isha Ambani, Director of Reliance Retail, remains optimistic. At the AGM, she reiterated the company’s goal of doubling its retail business within the next 3-4 years. For FY24, Reliance Retail reported gross revenues of ₹3.06 lakh crore, a 17.8% growth compared to the previous year. The segment remains a long-term growth driver for the company, with plans to expand its footprint significantly.
Telecom Segment: Jio’s Steady Performance
Reliance Jio, RIL’s telecom subsidiary, is expected to continue its robust performance. Antique Stock Broking forecasts a 2.8% QoQ growth in EBITDA, driven by strong results in the telecom segment. Jio’s ARPU (Average Revenue Per User) is expected to grow by 7% QoQ, fueled by a recent tariff hike. The subscriber base, though relatively flat due to SIM consolidation, is expected to increase marginally.
According to Nuvama Institutional Equities, Jio’s EBITDA is likely to surge 13% YoY and 5% QoQ, further offsetting the minor decline in subscriber numbers. Analysts expect Reliance Jio to add 1 million new subscribers in Q2, reaching 491 million subscribers, with ARPU growing to ₹195/month.
O2C Segment: Weak Growth Ahead
The oil-to-chemicals (O2C) business has been under pressure due to weak refining and petrochemical margins, leading analysts to project a 27% YoY decline in EBITDA for this segment. The O2C EBITDA could drop by 10% QoQ, largely impacted by global macroeconomic trends, including flat Singapore GRMs and lower diesel spreads.
Despite these challenges, Jefferies forecasts only a 1% EBITDA decline in the O2C segment compared to the previous quarter, as higher Russian discounts and the resumption of Venezuelan crude imports could cushion the blow. Antique Stock Broking anticipates a 3.1% QoQ drop in EBITDA but remains hopeful about the segment’s resilience in the face of tough global conditions.
Market Reactions Ahead of Results
In the lead-up to the Reliance Q2 results, the company share price has been relatively steady, settling 0.11% higher at ₹2,745.20 on the BSE. While the market remains cautious, analysts are divided over the potential impact of the results. Some experts expect flat profits, while others are forecasting a modest dip, ranging from 1% to 13% YoY, depending on how the O2C and retail segments perform.
Mukesh Ambani’s Vision: Creating Wealth for India
During the 47th AGM, Mukesh Ambani addressed shareholders, reiterating Reliance’s commitment to creating long-term value for the nation. He emphasized that Reliance’s goal is not just to pursue short-term profits but to “create wealth for India” through innovation, investment, and leadership across its diverse business segments. Ambani’s statement resonates with the company’s broader mission to drive the Indian economy forward, especially in telecom, retail, and energy.
Conclusion: Reliance’s Q2 Results and What’s Next
As Reliance Industries prepares to announce its Q2FY25 results, analysts expect muted growth due to challenges in the retail and O2C segments. However, with Reliance Jio expected to deliver strong numbers, and the company’s long-term outlook remaining positive, investors remain cautiously optimistic.
Reliance continues to be a driving force in the Indian economy, with bold plans to expand its retail and telecom businesses while navigating short-term hurdles in its O2C segment. As we await the final results, it’s clear that Reliance Q2 earnings will set the tone for the rest of the fiscal year.
Stay tuned for more updates and a detailed breakdown of Reliance Q2 FY25 results.
