Reliance Q2 Results Announcement: RIL's Net Profit Expected to Decline by Over 10%, Focus on Jio ARPU

Reliance Industries Ltd (RIL), led by Mukesh Ambani, is anticipated to report a second consecutive quarter of subdued performance, with its net profit expected to decline by 11-13% year-on-year (YoY) for the September quarter, attributed to flat net sales. Analysts suggest that RIL's upstream business may see a slight drop in production, while an increased share of profit petroleum to the government could impact margins.

While the core oil-to-chemicals (O2C) business is expected to perform poorly, healthy results in consumer-facing businesses may help offset these losses. Analysts are particularly focused on average revenue per user (ARPU) figures following recent tariff hikes.

JM Financial predicts an 11% YoY drop in RIL's profit, estimating it at Rs 15,518 crore, down from Rs 17,394 crore in the same quarter last year. They anticipate sales of Rs 2,30,715 crore, a 0.5% YoY decrease from Rs 2,31,784 crore. JM Financial also forecasts a gross refining margin (GRM) of $7.2 per barrel, compared to an implied GRM of $7.7 per barrel in Q1 FY25, and expects Jio's ARPU to reach Rs 194, driven by tariff increases and upgrades.

ICICI Securities also expects an 11% decline in RIL’s Q2 profit, estimating it at Rs 15,400 crore, with sales projected to rise by 4% YoY to Rs 2,40,500 crore. Emkay Global anticipates that Jio's net subscriber growth will remain flat quarter-on-quarter, with a 4% increase in ARPU to Rs 188.70 due to tariff hikes. Retail EBITDA is expected to rise by 1% QoQ to Rs 5,700 crore, while upstream EBITDA may decline by 1% QoQ to Rs 5,100 crore due to higher operating expenses. They project a 1% QoQ increase in consolidated APAT (after minority interest) to Rs 15,300 crore.

Systematix Institutional Equities notes that RIL’s core O2C business may suffer from weak refining and petrochemical performance, resulting in a 25.9% YoY reduction in O2C EBITDA. However, better results from the digital platform business due to the tariff hike are expected to partially offset this decline, with a projected EBITDA growth of 16.9% YoY. They estimate ARPU to rise by 5% to Rs 190.80 and predict an 8.7% YoY increase in the upstream oil and gas segment, driven by improved production from the KG-D6 block.

Nuvama estimates a 6% YoY decline in RIL’s consolidated EBITDA, primarily impacted by weak O2C performance, although this is partly offset by robust results from consumer businesses. They anticipate O2C EBITDA to decrease by 27% YoY due to poor refining conditions (with Singapore GRMs down 62% YoY) and weak petrochemical performance. They forecast O&G EBITDA to rise by 4% YoY due to a 3% YoY production increase, retail EBITDA to grow by 7% YoY owing to a 10% YoY rise in the retail area, and Jio EBITDA to increase by 12% YoY thanks to a higher ARPU (up 5% YoY). Nuvama has reduced its target price for RIL to Rs 3,660, reflecting the recent weakness in the O2C segment.

They project RIL’s Q2 profit to be Rs 15,120 crore, a 13% YoY decrease, with sales at Rs 2,33,484 crore, reflecting a 0.5% increase. Reliance Industries Ltd is expected to announce the record date for its 1:1 bonus share issue alongside the September quarter results today. The company revealed its sixth bonus issue—the largest in Indian history—on September 5.