Upstream, digital svcs offset RIL's Jul-Sept muted oil-to-chemicals showing
This story was originally published at 06:00 IST on 15 October 2024
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--RIL: Jul-Sept retail revenue growth was impacted by fashion and lifestyle
--RIL: Jul-Sept retail footfalls up 14.2% on year at 297 million
--RIL: Saw strong retail growth in first 2 weeks of Oct on festival demand
--RIL: Retail outlook looks positive, momentum will continue ahead of Diwali
--RIL: Continue to add customers in digital svcs, saw slight churn
--RIL: Carried out some recalibration of retail B2B ops to aid margins
--RIL: Improving bill values driving retail digital stores momentum
--RIL: Most capex now in oil-to-chemical, new energy operations
--RIL: Global demand pick-up may support oil-to-chemicals margin recovery
--RIL: Capacity rationalisation may support oil-to-chemicals margin recovery
--RIL: See global oil demand growth dropping under 1 mln bpd in 2024
--RIL: Polyethylene terephthalate demand was down 10% on extended monsoon
--RIL: Global oil demand growth expected to drop from 2.1 mln bpd in 2023
--RIL: Jio's home connect ops grew 3 times over last 4 quarters
--RIL: Strong uptake of broadband, 5G driving traffic
--RIL: See cash flow, balance sheet, liquidity remaining strong
MUMBAI – Reliance Industries Ltd. Monday during an investor presentation said strong upstream and digital services business performance in Jul-Sept largely offset muted earnings from its oil-to-chemicals business. The operating profit of Reliance's oil-to-chemicals business in Jul-Sept was INR 124.13 billion, down 23.7% on year due to weak margins and a muted demand environment, company officials said.
Earnings before interest, tax, depreciation, and amortisation was impacted by unfavourable global demand-supply balance, the company said in its presentation. The company said most of its capital expenditure is now incurred in its oil-to-chemicals and new energy business.
Revenue of Reliance Retail Ventures Ltd., the company's retail business arm, in Jul-Sept was INR 763.25 billion, lower than INR 771.63 billion a year ago. The company said the revenue growth of the retail business was impacted by weak demand in the fashion and lifestyle segment. Demand in the segment in Jul-Sept was impacted due to Shraddh period, the company said.
Reliance Industries for Jul-Sept reported consolidated net profit of INR 165.63 billion, higher than the street’s forecast of INR 156.94 billion but 4% lower on year. Consolidated revenue for Jul-Sept was INR 2.36 trillion, largely unchanged from the previous year.
Reliance Industries’ EBITDA in Jul-Sept was INR 439.34 billion, down 2% on year. The fall in operating profit was lower than the analysts' estimate of a 12% fall. EBITDA margin for Jul-Sept reduced to 17% from 17.5% a year ago.
The apparel and footwear business of its retail business was impacted by the overall weak macroeconomic environment in Jul-Sept, it said. The growth rate of Reliance's retail business was also hit in Jul-Sept as the company was focusing on streamlining operations. The company said it is focusing on strengthening its technology platforms and is calibrating its business-to-business approach. These moves are expected to work their way into the financials in the next two quarters, the company said.
The retail segment saw strong growth in demand in the first two weeks of October due to the festival season, it said. The company expects the momentum to continue ahead of Diwali and said it has an optimistic outlook. Reliance's jewels business showed steady growth in the quarter despite higher gold prices, the company said during the presentation. "The long-term fundamentals are good. Operational metrics are showing, we are optimistic about the next two quarters," the company said.
Reliance Jio continued to add customers in the September quarter but saw a slight churn, officials said during the presentation. Sim consolidation led to a higher churn in the quarter, the company said. Reliance Jio's average revenue per user increased to 195.1 in Q2FY25 from 144 in Q2FY22, the presentation showed. Reliance's home connect business rose 3 times over the last four quarters through Jio AirFiber, the company said.
OIL-TO-CHEMICALS OUTLOOK
Reliance expects global oil demand growth to be less than 1 million barrels per day on year in 2024 and 2025. This is lower than the growth of 2.1 million barrels per day seen in 2023. The company expects fuel markets to tighten in the near term. "Downstream margins are likely to improve with interest rates reduction and stimulus package in China. Indian downstream chemicals demand will benefit from upcoming festive season," the company said in its presentation.
On Monday, shares of Reliance Industries closed at INR 2745.05 on the National Stock Exchange, unchanged from the previous close. End
Reported by Anand JC and Anjana Antony
Edited by Vidhi Verma
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