Reliance Industries Limited (RIL) announced its consolidated and standalone unaudited financial results for the quarter ending September 30, 2024, showing mixed performance across its diverse business segments. The company reported a consolidated revenue of ₹ 2.58 trillion ($30.8 billion), which remained stable year-on-year (YoY), with improved volumes in the Oil-to-Chemicals (O2C) business and increased revenue in digital services. However, the EBITDA dropped by 2.0% to ₹ 43,934 crore ($5.2 billion) compared to the same quarter last year, primarily due to weaker performance in the O2C segment and reduced global demand.

Mixed Bag for Reliance’s Diverse Segments

Reliance’s performance this quarter illustrated the resilience of its diversified portfolio, despite headwinds in the Oil-to-Chemicals and Oil and Gas segments. O2C revenue increased by 5.1% YoY to ₹ 1.56 trillion, supported by higher product volumes and increased domestic placements. Yet, the EBITDA for the segment declined significantly by 23.7%, impacted by lower refining margins and weak global demand for chemicals, as the EBITDA margins fell by 300 basis points to 8% compared to the prior year.

Meanwhile, Jio Platforms Limited (JPL), Reliance’s digital arm, continued its impressive growth, registering a quarterly revenue increase of 17.7% to ₹ 37,119 crore, driven by revised telecom tariffs and the scaling up of digital services. JPL’s EBITDA jumped by 17.8% YoY to ₹ 15,931 crore, reflecting a stronger subscriber mix and improving engagement metrics.

Reliance Retail Ventures Limited (RRVL) faced challenges with revenue dipping by 1.1% YoY to ₹ 76,302 crore amid sluggish demand in the Fashion and Lifestyle category. However, EBITDA showed marginal growth, up 0.3% to ₹ 5,850 crore, largely due to cost streamlining measures and a focus on operational efficiency. Reliance opened 464 new retail stores in the quarter, further expanding its market presence to 18,946 stores.

Profit Decline Despite Jio’s Resilience

Reliance Industries reported a profit after tax (PAT) of ₹ 19,323 crore ($2.3 billion) for the quarter, a 2.8% decrease from the ₹ 19,878 crore reported in Q2 FY24. This decline was attributed to lower profits from the Oil-to-Chemicals and Oil and Gas segments, both impacted by unfavorable demand-supply dynamics.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries Limited, highlighted the resilience of the group despite market challenges, stating that the company’s diversified business model allowed it to mitigate the adverse impact on the O2C segment through growth in its digital services and upstream business. Ambani underscored Jio’s efforts in expanding its 5G network, which now covers 148 million subscribers, contributing to higher ARPU and improved customer engagement.

Expert Analysis – Growth Outlook Clouded by Margin Pressure

Industry experts suggest that while Reliance’s revenue stability and digital growth are commendable, the decline in profitability raises concerns regarding its reliance on external demand, particularly in the petrochemical sector. Analysts have pointed out that margins in the Oil-to-Chemicals segment are expected to remain under pressure due to persistent weakness in global chemical demand and an oversupplied market. Furthermore, experts believe that Reliance Retail’s focus on optimizing operations may continue to yield positive EBITDA growth, but overcoming the sluggish consumer sentiment in fashion and lifestyle could be challenging.

Rohit Sharma, a market analyst, commented that, “Reliance’s growth narrative is becoming increasingly reliant on Jio and digital services, with the O2C business witnessing significant margin contraction. The expansion in retail and Jio’s consistent subscriber base growth are promising, but cost pressures and weak global demand for chemicals remain a concern.” He added that the upcoming quarters will be crucial for Reliance to leverage its investments in renewable energy and diversify earnings further.

Share Price Sentiment and Stock Outlook

Reliance Industries Limited, which is publicly traded on the BSE (Scrip Code: 500325) and NSE (Symbol: RELIANCE), has seen mixed investor sentiment following the results. The stock price showed a modest dip post-announcement, reflecting the market’s cautious view on the weakened profitability despite steady revenues. Analysts note that Reliance’s stock might be subject to fluctuations based on commodity price movements and Jio’s subscriber growth trajectory. Investors are particularly keen to see how the rollout of its New Energy Giga-factories and other renewable initiatives will contribute to future earnings.

Future Developments in Renewable Energy

Mukesh Ambani also shared updates on the progress of Reliance’s New Energy Giga-factories. The company aims to start producing solar photovoltaic modules by the end of this year, with expectations to become a major player in the renewable energy space, covering solar, energy storage systems, green hydrogen, bio-energy, and wind energy. Analysts believe that successful execution in this segment will be key to diversifying the company’s revenue streams and reducing dependence on traditional energy and petrochemical businesses.

Reliance’s upcoming quarterly performance will be closely watched by investors and market analysts alike, especially considering the pressure on refining margins and the challenges in consumer-driven segments such as retail. The company’s continued focus on expanding its digital footprint, coupled with its commitment to renewable energy, could potentially provide a more balanced growth trajectory in the coming years.

  BSE, Jio, Jio Platforms, Mukesh Ambani, Mumbai, New Energy Giga-factories, NSE, Reliance Industries Limited, Reliance O2C, Reliance Retail Ventures