Billionaire Mukesh Ambani-led Reliance Industries Ltd (RIL) on Monday reported a near 5% drop in its consolidated net profit during the second quarter of the financial year 2024-25 (Q2FY25) as the company’s mainstay oil-to-chemical (O2C) segment was hit by falling prices and lower demand.
During the September quarter, RIL’s net profit came down to Rs 16,563 crore as against Rs 17,394 crore in the year-ago period. The firm's total revenue from operations remained almost flat year-on-year to 235,481 crore.
The O2C segment, which contributes more than half of RIL’s revenue, saw its EBITDA Margin getting contracted by 300 bps and EBITDA falling by 23.4% to Rs 12,413 crore in Q2FY25. Exports also fell 15.7% year-on-year to 70,631 crore. However, revenue of this segment grew 5.1% to Rs 155,580 crore.
“Unfavourable demand-supply balance led to sharp 50% decline in transportation fuel cracks and continued weakness in downstream chemical deltas,” said RIL in a statement.
In Q2FY25, global oil demand rose by only 0.8 mb/d Y-o-Y (vs 2.5 mb/d in 2Q FY24) to 103.9 mb/d. Dated Brent averaged $ 80.2/bbl in Q2FY25 down $ 6.6/bbl Y-o-Y. Crude oil benchmarks fell Y-o-Y due to lower-than-expected demand growth, especially in China.
“Increasing supplies from non-OPEC players pushed prices lower even though OPEC+ countries extended voluntary production cuts. Further, domestic polymer and polyester demand declined by 5% and 7% respectively due to seasonal factors in Q2,” sail RIL.
RIL’s Jio Infocomm witnessed a sharp surge of 17.7% in its revenue to Rs 37,119 crore and a 23.4% jump in its PAT to Rs 6,539 crore in Q2FY25, all thanks to the recent tariff hike.
Jio’s average revenue per user (ARPU) increased to Rs 195.1, up 7.4% y-o-y in Q2. The full impact of the tariff hike will flow through in the next 2-3 quarters, said the company. The tariff hike, however, led to a decline in customer base to 478.8 million in Q2FY25 from 489.7 million in Q1FY25.
Reliance Retail Ventures Ltd (RRVL) reported a marginal fall in its revenue to Rs 76,302 crore while PAT remained almost flat at Rs 2,836 crore. RRVL said that the growth was impacted by weak Fashion and Lifestyle (F&L) demand, continued focus on streamlining of operations and a calibrated approach to B2B business to improve margins.
The company’s Oil and Gas (exploration and production) segment reported EBITDA of Rs 5,290 crore (up 11%) and revenue of Rs 6,222 crore (down 6%) in Q2FY25.
“Our performance reflects robust growth in Digital Services and Upstream business. This helped partially offset weak contribution from O2C business which was impacted by unfavorable global demand-supply dynamics. Growth in Digital Services was led by increased ARPU and improving customer engagement metrics reflecting the strong value proposition of our services,” said Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited.
He added that the first of their New Energy Giga-factories is on-track to commence production of solar PV modules by the end of this 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,” said Ambani.