Reliance Q2 net profit falls 5% on weak O2C business

New Delhi: Reliance Industries Ltd, India’s most valuable company, on Monday reported a 5 per cent fall in the July-September quarter net profit as weak oil refining and petrochemical business hurt operational performance.

Its consolidated net profit fell to Rs 16,563 crore or Rs 24.48 per share in July-September - the second quarter of the current fiscal - compared to Rs 17,394 crore or Rs 25.71 a share in the same period a year back, according to a company statement.

While retail and telecom businesses posted steady performance, the oil-to-chemical (O2C) business saw margins shrink on global oversupply due to China flooding the market with petroleum products it made from refining cheap Russian crude oil. This led to a fall in product margins.

The profit before tax (EBITDA) dropped 2 per cent to Rs 43,934 crore. The financial performance was also impacted by finance costs rising by 5 per cent to Rs 6,017 crore, primarily due to higher debt. Also, depreciation rose by 2.3 per cent.

On the other hand, the firm’s other two main businesses - retail and telecom - saw steady performance. Retail earnings were muted as consumers held back buying before the start of the festive season.

Jio Platforms reported a 23.4 per cent year-on-year rise in consolidated net profit for Q2 FY25 to Rs 6,539 crore, as average revenue per user surged to Rs 195.1 per month, bolstered by tariff hike and better subscriber mix.

Reliance Retail Venture Ltd (RRVL), the retail arm of billionaire Mukesh Ambani-led Reliance Industries, reported a 3.53 per cent decline in operating revenue to Rs 66,502 crore for the quarter ended in September 2024, impacted by a weak demand and streamlining of operations.

Profit after tax was marginally up 1.28 per cent at Rs 2,836 crore for the second quarter of the 2024-25 financial year.

The telecom segment was the bright spot, with all four key parameters - data minute usage, data consumed, average per-user earnings and number of subscribers - showing growth. Upstream oil and gas production business too saw handsome growth, with the firm and its joint venture partner BP Plc of the UK now producing a third of all the gas produced in the country. Its total income was marginally higher at Rs 2.4 lakh crore from Rs 2.38 lakh crore in July-September 2023.

The firm’s debt rose to Rs 3.36 lakh crore as of September-end compared to Rs 3.04 lakh crore at the end of June and Rs 2.95 crore in the year-ago period. After accounting for cash in hand, the net debt was Rs 1.16 lakh crore against Rs 1.17 lakh crore in July-September 2023.

EBITDA for Jio Platforms increased 17.8 per cent year-on-year due to better subscriber mix, digital services scale-up and revision in telecom tariffs.

The same for Reliance Retail Ventures Ltd (RRVL) improved by 30 basis points with a continued focus on streamlining operations and a calibrated approach in B2B. O2C EBITDA was lower by 23.7 per cent due to a sharp decline in product margins. Fuel cracks, or the differential between raw material crude oil and finished petroleum products, declined by nearly 50 per cent year-on-year.