India's largest company in terms of market share, Reliance Industries (RIL) is all set to announce its second-quarter earnings for FY25, on Monday, October 14, 2024. With that Reliance will also announce its telecom business, Reliance Jio and retail giant, Reliance Retail's Q2FY25 earnings as well. In Q2FY25, Reliance is expected to see growth in its EBITDA, largely driven by telecom business whose tariff hikes are seen to offset the impact of weakness in the O2C business and laggard EBITDA of the retail business. Accordingly, Reliance Industries share price will be in focus.
Reliance Industries Share Price:
RIL stock is at Rs 2742.20 apiece, with a market cap of Rs 18,55,366.53 crore on BSE. The stock's price-to-equity ratio is at 46.36x, while its return on equity is at 7.77%.
As per the regulatory filing, the meeting of the Board of Directors of the Company is scheduled on October 14, 2024,inter alia, to consider and approve the standalone and consolidated unaudited financial results of the Company for the quarter and half year ended September 30, 2024.
Reliance Industries Q2 Preview:
Brokerage Emkay Global expects Reliance's O2C EBITDA to decline 3% QoQ to Rs127.6 billion; while its Upstream EBITDA is seen to dip 1% QoQ to Rs51.4 billion. Additionally, the Retail EBITDA is to increase by 1% QoQ to Rs57.4 billion, while Jio ARPU is to rise 4% QoQ with Jio EBITDA to grow 6% QoQ to Rs159 billion making it the star performer of Reliance earnings. However, subscribers are expected to decline by 0.07 mn in Q2FY25.
In Nuvama's view, the company's consolidated EBITDA is seen at -6% YoY on soft O2C (Singapore GRM -62% YoY), sharply lower Russian crude discount, partly offset by 7% YoY retail growth, 5% ARPU hike, 3% YoY O&G production gain.
Further, Prabhudas Lilladher said that in Reliance's standalone segment, refining margins are expected to decline and Petchem will remain under pressure. The brokerage expects a 0.6% QoQ subscriber growth and 6% ARPU to Rs194/mon growth for Jio while the retail segment should continue its resilient performance.
Meanwhile, in Q2FY25, ICICI Securities' note said, "Reliance is likely to see a sharp decline (-9%) in its OTC segment earnings QoQ with an estimated USD 0.8/bbl QoQ decline in GRMs, partly offset by marginally better petchem spreads. RJio may deliver a 6.6% QoQ rise in EBITDA, with RIL's retail EBITDA flat QoQ. Upstream is also likely to show softness, with a slight production decline and higher profit petroleum share of government to dent margins."
Overall, ICICI Securities believes Reliance's consolidated EBITDA/PAT may rise by a marginal 2%/2% QoQ in Q2FY25E, with a YoY decline at 4%/11%.
Moreover, JM Financial's note said, RIL's 2QFY25 EBITDA is likely to grow 2.5% QoQ to INR 397bn due to a tariff-hike-led 9.4% QoQ rise in Digital EBITDA; though that is likely to be partly offset by 3.9% QoQ decline in O2C segment driven by lower refining & petchem margins. Further, Retail EBITDA is expected to be up only 0.6% QoQ and E&P EBITDA up only 0.5% QoQ,
Key assumptions for Reliance Q2 results as per JM Financial are - a) O2C EBITDA to fall 3.9% QoQ to INR 126bn due to a decline in GRM to ~USD 7.2/bbl (vs. implied GRM of ~USD 7.7/bbl in 1QFY25) due to lower diesel cracks while refining throughput could rise 1.6% QoQ to 16.3mmt; further, petchem margin is expected to decline QoQ; b) E&P EBITDA to increase 0.5% QoQ to INR 52bn due to largely flattish gas output and price; c) Retail EBITDA is likely to grow only by 0.6% QoQ only to INR 57bn due to ongoing store rationalisation and impact of heavy monsoon; d) Digital EBITDA is expected to grow 9.4% QoQ to INR 164bn on 7% QoQ rise in ARPU to INR 194, led by tariff hike and aided by upgrades and one more day during the quarter.
During June 2024 quarter, consolidated net profit that was attributable to owners of the company, dropped by 5.45% YoY and 20.12% QoQ to Rs 15,138 crore in Q1FY25. Meanwhile, consolidated revenue stood at Rs 236,217 crore, a growth of 12.04% from Rs 210,831 crore in Q1FY24, however, it declined marginally by 1.86% from Rs 240,715 crore in the March 2024 quarter.
In Q1, EBITDA stood at Rs 38,765 crore in Q1FY25, slightly up from Rs 38,093 crore in Q1FY24, but declined sharply from Rs 42,516 crore in Q4FY24. Whereas, EBITDA margins contracted to 16.7% in the quarter, compared to 18.4% in Q1FY24 and 18% in Q4FY24.
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