Reliance Industries Q2 Preview: Weak O2C Segment To Drag Ebitda, Say Analysts

Reliance Industries Ltd.'s consolidated Ebitda is expected to fall sequentially in the second quarter of financial year 2025, as per brokerages.

The segment that is estimated to drag down the company's financials this quarter is its standalone business that engages in the oil to chemicals, and oil and gas business. The company's other major segments—retail and Jio are projected to see healthy growth.

As per Bloomberg consensus estimates on Oct. 11, Reliance Industries' consolidated revenues are expected to be muted, with a 2.2% quarter-on-quarter growth.

The company's Ebitda is expected to fall 5.4% sequentially. While, margins are estimated to contract to 17.1% in the second quarter, compared to 18.4% last quarter.

Profits, on the other hand, are expected to see an over 20% uptick, as per Bloomberg.

Reliance Industries' Ebitda could fall 5.5% on a year-on-year basis, due to a weak O2C segment, partially offset by strong performance across consumer businesses, Nuvama said.

While, Motilal Oswal Financial Services Ltd. sees the company's consolidated Ebitda growing 2% annually to Rs 39,700 crore.

Expected Segment Wise Performance:

The company's oil to chemicals segment could see a weak quarter due to the negative trajectory of benchmark Singapore gross refining margins, which fell 62% year-on-year in the quarter ended Sept. 30, 2024. Prabhudas Lilladher Pvt. projects the company's refining throughput at 17 million tonnes per annum.

Both Motilal Oswal and Nuvama expect RIL's O2C Ebitda to fall 26-27% year-on-year to around Rs 14,100 crore.

As per Nuvama, the company's oil and gas Ebitda may rise 4% year-on-year, due to the expected 3% annual production uptick.

It is key to note the O2C and upstream oil and gas segments contributed 53% to Reliance Industries' consolidated Ebitda in fiscal 2024.

The retail segment's profitability should be resilient in the second quarter, according to Prabhudas Lilladher.

Nuvama expects the retail business' Ebitda to grow 7% year-on-year due to the 10% rise in retail area over the same period. Motilal Oswal expects the retail business to grow 10% year-on-year to Rs 5,400 crore.

Brokerages expect Jio to post a strong and steady quarter, on the back of the tariff hikes announced by the company.

Nuvama expects Jio's Ebitda to rise 12% and 6% on an annual and sequential basis, respectively. Growth will be driven by higher average revenue per user, which the brokerage expects will grow 5%. The growth in ARPU is set to offset the 1% quarter-on-quarter moderation in subscriber base, Nuvama forecasts.

Prabhudas Lilladher has a similar view, expecting a 7% sequential uptick in ARPU and a muted rise in subscriber growth at 0.6%.

According to Motilal Oswal, some of the key monitorables will be:

• Further clarity on the Rs 75,000 crore announcements in the new energy business.

• Growth in retail store additions.

• Any pricing action in the Indian telecom industry.