Reliance Industries Ltd (RIL) has delivered a broadly in-line first-quarter performance, driven by a strong rebound in its Oil-to-Chemicals (O2C) division and sustained momentum in its Jio telecom arm, according to an analysis by Equirus Securities. While consolidated net profit saw a year-on-year decline, recurring profit figures showed growth, aligning with analyst expectations.
O2C Business Sees Strong Recovery
The O2C segment emerged as a key performance driver for RIL in Q1. Equirus noted that stronger middle-distillate cracks, robust petrochemical spreads, and advantageous crude sourcing significantly boosted O2C Ebitda per metric tonne, which surged by 24% quarter-on-quarter to $115 per metric tonne. This performance exceeded Equirus's own projections. However, a 7% quarter-on-quarter reduction in volumes somewhat limited the overall segment Ebitda.
Jio Maintains Robust Performance
RIL's telecom venture, Jio, continued its strong execution throughout the quarter. The business benefited from consistent subscriber additions and a modest improvement in average revenue per user (ARPU), leading to record-high Ebitda margins. This consistent performance underscores the inherent strength and growth trajectory of the telecom franchise.
Retail Faces Margin Pressure
In contrast to the O2C and Jio segments, RIL's retail business experienced margin compression during the quarter. This was attributed to ongoing strategic investments aimed at scaling its digital commerce operations. Equirus indicated that retail margins reached a 15-quarter low, reflecting the significant expenditure in this growth area.
Upstream Business Improves, Overall Financials Detailed
The upstream business, encompassing oil and gas exploration, showed a sequential recovery following the completion of maintenance activities. Despite this improvement, lower KG-D6 gas prices and reduced volumes continued to exert downward pressure on earnings from this segment. Overall, RIL reported a 22.40% year-on-year decline in consolidated net profit, reaching Rs 20,946 crore for the June quarter, down from Rs 26,994 crore in the previous year. This decline was primarily influenced by a substantial drop in other income, which fell to Rs 6,550 crore from Rs 15,119 crore a year ago, with the prior year's figure including a significant gain from the sale of investments in Asian Paints. On a recurring basis, consolidated profit after tax (PAT) stood at Rs 23,196 crore, marking a 6.1% year-on-year increase. Net sales for the Mukesh Ambani-led conglomerate grew by 25.41% year-on-year to Rs 3,11,850 crore, up from Rs 2,48,660 crore in the corresponding quarter last year.