Reliance Industries Q3 Results Highlights: Jio's ARPU sees 10% CAGR over five years, tariff hike impact yet to fully materialise

The Apparel & Footwear segment saw a strong recovery, driven by the launch of trendy designs and an improved in-store experience. New categories such as beauty and sleepwear were introduced across store formats, expanding the product offering.

Innovative store formats like Yousta, Azorte, and GAP achieved their highest-ever sales, contributing to growth. Additionally, the contribution from own brands continued to rise, with Avaasa, Netplay, and DNMX emerging as leading names in their respective categories.

Retail stores experienced robust growth during the quarter, boosted by the festive and wedding season, with strong increases in average basket value (ABV) and conversions. The festive period, along with a successful New Year campaign featuring new product launches and attractive promotions, drove a 12% year-on-year growth.

ResQ, the largest electronics service organization, expanded its on-demand services to 75 additional cities, bringing total coverage to 225 cities. The PBG segment also saw growth with the expansion of its portfolio and a 75% year-on-year increase in its merchant base. The JMD business maintained growth momentum, led by strong mobile phone sales and an increasing wallet share from merchant partners.

Jio’s ARPU has grown at a compound annual growth rate (CAGR) of around 10% over the last five years. The full impact of the July 2024 tariff hike is still expected to unfold. With a focus on affordability and increasing customer engagement, Jio is poised to sustain ARPU growth in its connectivity services. The distribution of digital platforms across both small and large screens is also expected to enhance customer wallet share.

As of December 2024, Jio’s 5G network has crossed 170 million subscribers, with 5G now accounting for approximately 40% of wireless traffic, reaching around 15 exabytes during the quarter. The network continues to lead the market, attracting nearly 70% of the incremental 5G devices sold across India.

Higher volumes, particularly following a turnaround in Q3 FY24, contributed to strong performance. The segment saw robust growth in domestic fuel retailing, with gasoline volumes up 44% and diesel volumes increasing by 23%.

There was healthy domestic demand across key products, with oil growing 5.5%, polymer increasing by 11%, and polyester rising by 12%.

However, the margin environment was mixed, influenced by weak global demand and a well-supplied market. Fuel cracks declined from elevated levels seen in the previous year, while polymer deltas saw an increase of 1-9% due to low feedstock prices.

Quarter-on-quarter, EBITDA grew by 16%, primarily driven by the recovery in refining margins.

The Digital Services segment of Reliance Industries experienced robust growth, driven by the impact of tariff hikes and the expansion of home and digital services. EBITDA margin was maintained at 50.1%.

Customer additions rebounded in Q3 following a temporary consolidation impact due to the tariff hike, with a net addition of 3.3 million subscribers. Data traffic saw a 22% year-on-year increase, reaching 46.5 billion GB, fueled by rising 5G adoption and FTTH subscriptions. Notably, 170 million subscribers migrated to Jio True5G.

The home services segment also demonstrated strong growth, adding 2 million new home connections during the quarter.

Reliance Industries reported further growth in ARPU, driven by the sustained impact of tariff hikes and an improved subscriber mix. The company indicated that additional benefits from the tariff hike will continue to flow through in the coming months.

Jio remains at the forefront of 5G adoption in India, with 170 million True5G subscribers accounting for 40% of Jio’s wireless traffic. The company’s capital expenditure stood at Rs 32,259 crore, comfortably supported by a cash profit of Rs 38,227 crore.

Reliance Jio reported a net profit of Rs 6,477 crore for the third quarter of FY25, marking an increase from Rs 5,208 crore in the same period last year. The company’s revenue for the quarter stood at Rs 29,307 crore, up from Rs 25,368 crore YoY.

EBITDA also showed impressive growth, rising to Rs 15,478 crore from Rs 14,064 crore in Q3 FY24. The EBITDA margin improved slightly, reaching 52.8%, compared to 52.3% during the same period last year.

Mukesh Ambani said, "Robust growth in digital services led by sustained subscriber addition" and adding that "Digital growth is supported by a favorable subscriber mix." He also praised the retail segment, stating that it "delivered a strong performance" and "capitalized on the pick-up in consumption amid festive demand."

Regarding the Oil-to-Chemicals (O2C) business, Ambani noted its "innate resilience," with "refining margins recovering sequentially." He further added that the "upstream segment continues to play a pivotal role." Looking ahead, he remarked that RIL is "geared up for transformational growth" and is "set to experience it in the near future."

Reliance Industries Limited (RIL) reported robust growth in key business segments during the third quarter of FY25, with strong performances in Digital Services, Retail, and Oil-to-Chemicals (O2C).

The O2C segment demonstrated resilience, driven by strong domestic demand, higher volumes, and operational flexibility. Retail business EBITDA showed healthy year-on-year growth, coming in at Rs 6,840 crore, reflecting sustained momentum in the segment.

The Digital Services segment delivered a standout performance, with EBITDA rising 17% year-on-year to Rs 16,640 crore, underscoring the company's continued growth in this space.

Reliance Industries Limited (RIL) reported a steady performance in its key businesses for the third quarter of FY25, with the Oil-to-Chemicals (O2C) segment recording a revenue of Rs 1.49 lakh crore, up from Rs 1.41 lakh crore in the same quarter last year. The segment’s EBITDA stood at Rs 14,402 crore, slightly higher than Rs 14,064 crore in Q3 FY24. However, the EBITDA margin for the O2C business declined to 9.6% from 10% a year ago.

The Oil & Gas business, meanwhile, reported a revenue of Rs 6,370 crore, down from Rs 6,719 crore in the year-ago period. EBITDA for the segment also fell to Rs 5,565 crore from Rs 5,804 crore last year, while the EBITDA margin improved slightly to 87.4% from 86.4%.

Reliance Retail reported a revenue of Rs 90,351 crore for the third quarter of FY25, reflecting a 9% year-on-year (YoY) increase from Rs 83,040 crore in the corresponding period last year.

The company’s EBITDA grew to Rs 6,840 crore, up 9% from Rs 6,271 crore YoY, maintaining a steady EBITDA margin of 7.6% during the quarter, unchanged from the year-ago period.

Reliance Industries Limited (RIL) reported a consolidated net profit of Rs 18,540 crore for the third quarter of FY25, an increase from Rs 17,265 crore in the same period last year.

The company’s consolidated revenue stood at Rs 2.40 lakh crore Vs Rs 2.25 lakh crore in Q3 FY24. Consolidated EBITDA also showed strong growth, rising to Rs 43,789 crore from Rs 40,656 crore.

The EBITDA margin improved slightly to 18.3% in Q3 FY25, compared to 18.1% in the year-ago quarter.

Sequential improvement in Reliance Industries' Oil-to-Chemicals (O2C) segment is anticipated, driven by a recovery in diesel cracks and reduced crude premiums, according to Emkay Research. Analysts project refining margins (GRMs) to range between $8.7 and $10.8 per barrel, supported by improved supply-demand dynamics outside China and a favorable cost base. However, Goldman Sachs highlighted ongoing challenges in the petrochemicals segment, with supply and demand issues persisting for olefins and certain aromatics.

Jio's Average Revenue Per User (ARPU) is projected to increase to Rs 205, up from ₹195 in the previous quarter. Subscriber additions will be a key focus, with analysts estimating a recovery to 485 million subscribers, compared to 478.8 million in the prior quarter.

Shares of Reliance Industries surged 1.8% on Thursday, closing at Rs 1,275, marking the highest point of the day. The stock's strong performance contributed over 15 points to the Nifty's gains.

Among the brokerages surveyed by Moneycontrol, Elara Capital stands out with the most optimistic projections, predicting a robust 10% sequential rise in net profit and 6% quarter-on-quarter EBITDA growth for the quarter.

Brokerages forecast RIL’s fiscal third-quarter EBITDA margin to range between 18.2% and 18.9%, marking an improvement from the previous quarter. This is primarily attributed to higher gross refining margins (GRMs) in the refining business and the ongoing impact of recent tariff hikes in digital services.

Growth in ARPU: Jio, Reliance's telecom arm, saw its monthly average revenue per user (ARPU) rise by 7.4% year-on-year to Rs 195.1. The company expects the full impact of its recent tariff hikes to reflect in the next 2-3 quarters.

5G Leadership: Jio continued to strengthen its 5G dominance, with 148 million subscribers upgrading to the faster service, contributing 34% of the wireless data traffic for Jio.

Record Profit for Jio Platforms: Jio Platforms, which houses RIL’s digital services businesses, recorded a quarterly profit of Rs 6,536 crore. Growth in Digital Services was driven by increased ARPU and improving customer engagement metrics.

Reliance Industries Ltd (RIL) reported a 9.4% increase in its fiscal second-quarter net profit, reaching Rs 16,563 crore, surpassing analysts' expectations. This growth was primarily driven by strong performances in its telecom and retail segments.

Revenue and Profit Details

Revenue from operations for India's most valuable company stood at Rs 2.35 lakh crore for the quarter ending September 30, slightly lower than ₹2.36 lakh crore in the previous quarter. Chairman Mukesh Ambani attributed the company’s performance to robust growth in Digital Services and the Upstream business, which helped offset weaker contributions from the O2C business, impacted by unfavorable global demand-supply dynamics.

Retail Weakness Temporary: CLSA acknowledged that ongoing challenges in retail profitability have weighed on the stock but expects a recovery in the latter half of 2025.

Key Drivers: The brokerage cited several growth factors:

The ramp-up of AirFiber subscribers for Reliance Jio.

Full impact of recent tariff hikes, with the possibility of further hikes ahead of Jio’s expected IPO in late 2025.

Target Price and Upside: CLSA maintained its “outperform” rating with a target price of Rs 1,650, indicating a 32 percent upside.

Improved Sentiment: As of December, RIL had 33 “buy,” three “hold,” and three “sell” recommendations, compared to 25 “buy,” eight “hold,” and three “sell” calls in the previous quarter.

Stock Correction Drives Optimism: The shift in outlook follows a nearly 20 percent drop in RIL’s share price from its July peak, prompting analysts to view the current valuation as an opportunity for long-term gains.

• O2C Refining Margins: Commentary on the sustainability of higher GRMs and the potential recovery of the petrochemical segment will be crucial for future outlooks.
• Digital Services Growth: ARPU trends, subscriber dynamics, and growth in broadband services will be key metrics to monitor.
• Retail Segment Outlook: Updates on urban consumption recovery and the company’s plans for store network expansion will be closely tracked.
• Capex and Debt Management: Investors will focus on any moderation in capital expenditure, net debt reduction trends, and potential updates regarding the timeline for Jio’s public listing.

Urban Consumption Recovery: The retail segment is projected to see 5-6% QoQ EBITDA growth, driven by higher footfalls and improved urban demand.

B2B Challenges: Analysts note that a more cautious approach in the B2B segment may limit growth in this quarter.

Higher ARPU Driving Earnings: Reliance Jio is expected to deliver a strong performance, with EBITDA likely rising 17% year-on-year (YoY) and 4% QoQ. Analysts forecast ARPU to increase to Rs 203-205, bolstered by the impact of recent tariff hikes.

Subscriber Base Stability: Subscriber additions are expected to remain muted but stable, reflecting steady growth in Jio’s broadband and telecom segments.

Stronger GRMs: Gross refining margins (GRMs) are expected to range between $8.7 and $10.8 per barrel, driven by better supply-demand dynamics outside of China and reduced crude premiums, according to Emkay Research.

Petchem Weakness: The petrochemical segment is likely to remain under pressure, with Goldman Sachs citing ongoing supply and demand issues for olefins and certain aromatics.

Sequential Growth in Revenue and Profit: Analysts anticipate RIL’s Q3 revenue to rise quarter-on-quarter (QoQ), with net profit growing at a faster pace. According to a Moneycontrol poll, consolidated net profit is forecast to grow 6% sequentially to Rs 17,482 crore.

EBITDA Growth Forecast: Consolidated EBITDA is projected to expand over 5% QoQ to Rs 41,125 crore, driven by stronger refining margins and higher average revenue per user (ARPU) in digital services, despite challenges in the petrochemical segment.

EBITDA Margins: Analysts estimate EBITDA margins to improve to 18.2%-18.9%, up from the previous quarter, supported by gains in the refining and digital services businesses.

The retail business reported a profit of Rs 2,836 crore for the September 2024 quarter, reflecting a 1.3 percent increase compared to the same period last year and an 11.3 percent rise from the June quarter. Revenue for the segment stood at Rs 76,302 crore, a 1.1 percent decline year-on-year, though it grew by 0.9 percent quarter-on-quarter. Reliance attributed the growth impact to weak demand in fashion and lifestyle (F&L), a continued focus on streamlining operations, and a calibrated approach to the B2B business to improve margins. EBITDA for the segment reached Rs 5,675 crore in Q2FY25, marking a 1 percent increase year-on-year, with a 30 basis points margin expansion to 8.8 percent.

Jio Financial Services Ltd (JFSL), which was spun off from Reliance Industries Ltd and listed on the stock exchanges last year, reported a 3 percent increase in net profit, reaching Rs 689 crore for the quarter ending September 30. Revenue grew 14 percent to Rs 693.5 crore in the fiscal second quarter, up from Rs 608 crore in the same period last year, according to a regulatory filing on October 18. On that day, JFSL shares closed slightly higher at Rs 329.6 on the BSE. Additionally, JFSL and BlackRock, the world’s largest asset manager, announced plans to launch asset management and broking businesses in India. (Read More)

RIL has experienced a notable shift in analyst sentiment over the past quarter, following a correction in its stock price, according to Moneycontrol's December analyst call tracker. By December, the stock had received 33 “buy,” three “hold,” and three “sell” recommendations from brokerages, compared to 25 “buy,” eight “hold,” and three “sell” calls in the previous quarter. This change in outlook follows a nearly 20 percent decline in RIL’s shares from their July peak. Analysts now view this underperformance as an opportunity, with the stock trading at an attractive valuation, presenting a solid entry point for potential gains as key catalysts are expected to unfold in 2025. (Read More)

Analysts will closely monitor key areas in Reliance Industries' upcoming results. In the O2C segment, any commentary on the sustainability of gross refining margins (GRMs) and the outlook for petrochemical recovery will be vital. For digital services, attention will be focused on ARPU trends, subscriber base dynamics, and the growth trajectory of Jio’s broadband services. The retail segment outlook will also be of interest, with updates on the recovery of urban consumption and plans for expanding the store network. Additionally, investors will be watching for any signals regarding capex moderation, net debt reduction, and potential updates on the timeline for Jio’s listing.

A Moneycontrol poll of brokerages indicates that Reliance Industries is expected to report a strong 6 percent sequential growth in net profit, reaching Rs 17,482 crore, and a healthy quarter-on-quarter EBITDA expansion of over 5 percent, amounting to Rs 41,125 crore for the October-December quarter.

Reliance Industries is expected to release its Q3 FY25 financial results on January 16, with analysts forecasting a mixed performance. The company is likely to see strong earnings growth from its telecom segment, improvements in refining margins, and moderate growth in retail. While Q3 revenue is expected to rise on a quarter-on-quarter basis, net profit is projected to grow at a faster rate sequentially. Analysts also anticipate that consolidated EBITDA will benefit from stronger refining margins and higher ARPU in digital services, despite weaker performance in petrochemicals. (Read More)