The retail segment was affected by a demand slack in the fashion and lifestyle (F&L) vertical and a sequential decline in total store area. The digital segment reported a sequential drop in subscriber numbers amid tariff hikes and higher average revenue per user (ARPU).
In the near term, economic impetus in China, winter demand in the West and firm petrochemicals demand in India are key positives for the O2C segment while rising geopolitical tensions may heighten volatility in the global crude oil market.
RIL’s net debt increased by ₹4,097 crore sequentially to ₹1,16,438 crore at the end of the September quarter while capex rose to ₹34,022 crore from ₹28,785 crore in the previous quarter.
The conglomerate’s consolidated revenue increased by 0.8% year-on-year to ₹2,58,027 crore while net profit fell by 2.8% to ₹19,323 crore, marking a second consecutive quarter of decline. The operating profit before depreciation and amortisation (Ebitda) fell by 2% to ₹43,934 crore, dragged down by a 23.7% fall in the Ebitda of the O2C division. This segment contributed 60% to the consolidated revenue and 28.3% and Ebitda. “Demand scenario for refining business has turned bearish over the last couple of months along with petrochemical margins,” noted ICICI Securities in a review report adding that overall O2C prospects remain tepid for the next 12-18 months.
According to JM Financial Research, the implied gross refining margin for RIL’s refining activities was lower at $7.1 per barrel compared with $ 7.7 per barrel in the previous quarter.Among the consumer-facing businesses, the revenue of Jio Platforms increased by 17.7% YoY to ₹37,119 crore while net profit rose by 23.4% to ₹6,536 crore. While the subscriber base improved by 4.2% YoY to 478.8 million, it fell by 2.2% sequentially following tariff increases. The ARPU improved by 7.4% sequentially and YoY to ₹195.1.The retail segment’s revenue dropped by 1.1% YoY to ₹76,302 crore whereas net profit rose by 5.2% to ₹2,935 crore. On a sequential basis, while the number of stores increased by 28 to 18,946, the area under operation reduced to 79.4 million square feet from 81.3 million square feet implying consolidation of larger store formats.
Some analysts have reduced RIL’s earnings estimates after the Q2 results. “We reduce FY25 and FY26 EPS by 14% and 8%, led by lower refining and petrochemicals margins,” said Elara Securities. The firm has pared the target price to ₹3,265 from ₹3,636 while reiterating the “accumulate” call.