Reliance Industries Reports Declining Q2 FY25 Profits Amid Weak O2C Segment, But Digital Services Show Resilience
Oct 15
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Reliance Industries Ltd. (RIL), India’s oil-to-telecom-to-retail powerhouse, reported a nearly 5% year-on-year (YoY) drop in consolidated net profit for the second quarter of FY25. This marks the third consecutive quarter of YoY profit decline, with the company’s oil-to-chemicals (O2C) segment being a major drag. However, the digital services and upstream businesses offered a silver lining, demonstrating strong growth and helping offset the weakness in the O2C segment.
Stock Market Reaction
Following the earnings report, RIL’s stock initially dropped by 1.1%, hitting a low of ₹2,713.55, before recovering to close flat, showing the market's mixed response to the results.
Performance Snapshot
Reliance total income for the quarter grew by a modest 0.65%, rising to ₹2,40,357 crore from ₹2,38,797 crore in Q2FY24. However, consolidated earnings before interest, tax, depreciation, and amortization (EBITDA) fell 2% YoY, standing at ₹43,934 crore, with EBITDA margins slightly down to 17% from 17.5% the previous year.
RIL’s debt also rose, with outstanding debt climbing to ₹3,36,337 crore at the end of the quarter, compared to ₹2,95,687 crore in Q2FY24.
Key Segments: Digital Growth vs O2C Struggles
Mukesh Ambani, Chairman of Reliance Industries, addressed the challenges faced by the company’s O2C business, which struggled due to unfavorable global demand-supply dynamics. However, the digital services segment performed strongly, benefiting from revised telecom tariffs and the expansion of its home and digital services offerings.
Ambani also emphasized the company's diversified business portfolio, which helped cushion the impact of the underperforming O2C segment. RIL's oil and gas segment saw a 6% revenue decline, primarily due to lower gas price realizations, despite higher volumes and increased domestic placements in the oil-to-chemicals business.
Reliance Profit Trends
RIL’s consolidated net profit for the quarter was ₹16,563 crore, down from ₹17,394 crore YoY. However, on a sequential basis, the company posted a 9.4% increase in net profit compared to the previous quarter. Despite this, the YoY decline highlights ongoing pressure, particularly from the O2C segment.
Outlook
While RIL faces challenges in its O2C segment, analysts see a resilient outlook for the company, buoyed by the strength of its digital services and upstream businesses. As global market dynamics continue to shift, the company’s ability to leverage its diverse business portfolio will likely play a key role in navigating future headwinds.
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