RIL Q1 Results Preview: Telecom, retail, oil & gas to drive earnings growth, offset O2C decline

RIL's consolidated revenue for Q1 FY25 is expected to rise to Rs 2.36 lakh crore.

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Reliance Industries Ltd (RIL) is expected to post modest quarterly earnings growth on July 19, bolstered by robust performances in its telecom and retail segments and steady oil and gas production. However, the growth may be tempered by a decline in the oil-to-chemicals (O2C) business on weaker gross refining margins (GRMs).

RIL's consolidated revenue for the quarter ended June 30 is expected to rise 12.7 percent from a year earlier to Rs 2.36 lakh crore, while net profit is expected to expand by 0.6 percent to Rs 16,082 crore, according to a Moneycontrol survey.

Factors driving growth

Earnings growth has been driven by robust performances in RIL's consumer-facing telecom and retail businesses, while the O2C segment is expected to underperform due to weaker refining margins from a year earlier.

RIL Q1 FY25 Results Estimates

"We expect RIL to post 4 percent year on year EBITDA (earnings before interest, taxes, depreciation, and amortisation) growth as consumer businesses and oil & gas production offset the decline in O2C margins," analysts at BOB CAPS said in a note to clients. They noted that margins across various segments are now normalising.

Telecom growth: Telecom arm Reliance Jio continued to expand its subscriber base, adding as many as 9 million users in the June quarter, according to analysts. The monthly average revenue per user, or ARPU, is set to see a slight increase, contributing to quarter-on-quarter growth in revenue and EBITDA. Jio added 9 million subscribers in the year-earlier June quarter.

Retail Expansion: The retail segment is anticipated to witness ongoing growth driven by increased footfalls and new store additions. EBITDA for retail is projected to grow by 16 percent from a year earlier. The previous year saw a similar trend with significant revenue growth.

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Oil & Gas Production: The upstream oil and gas segment is expected to show steady performance, with margins now normalising, BOB CAPS said. The strong performance of the oil & gas segment is seen as helping offset the decline in O2C margins.

Weak O2C Performance: The O2C segment is expected to drag down overall performance due to a significant correction in GRMs, which narrowed to $3-4 per barrel in the June quarter from $7-8/bbl in the March quarter. This decline is expected to result in a 19-21 percent drop in O2C EBITDA from the preceding three months.

What to watch in quarterly results

Analysts will monitor the performance of RIL's O2C segment, particularly the impact of lower GRMs on profitability. Additionally, updates on subscriber additions and ARPU growth in the telecom segment, as well as footfall and store addition metrics in the retail segment, will be crucial. Investors will also be looking for any announcements related to the progress of 5G rollout and potential impacts of recent tariff hikes on future earnings.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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