Reliance Q1 Results Preview: Will Mukesh Ambani's Oil Giant Continue To Earn Profit Or Surprise Await?

India's largest company in terms of market share, Reliance Industries (RIL) is set to announce its financial results for the quarter ending June 2024 period. In Q1FY25, Reliance's EBITDA is expected to decline sequentially owing to a decrease in refining & petchem margins. O2C business EBITDA is seen to fall by 20% QoQ, while retail and digital EBITDA is expected to report single-digit growth. RIL's two giant subsidiaries Reliance Retail and Reliance Jio will also declare their Q1 results on July 19.

Ahead of the Q1 results, Reliance's stock price has neared its 52-week high levels which is at Rs 3,217.90 apiece. On July 18, the stock price ended at Rs 3170.35 apiece, up by 0.60%.

During the fourth quarter of FY24, Reliance posted a net profit of Rs 21,243 crore, while revenue stood at Rs 264,834 crore. EBITDA was at Rs 47,150 crore and EBITDA margins were at 17.8% in Q4FY24.

Meanwhile, FY24's overall gross revenue was at Rs 1,000,122 crore ($ 119.9 billion), up 2.6% Y-o-Y, supported by continued growth momentum in consumer businesses and upstream business. EBITDA increased by 16.1% Y-o-Y to Rs 178,677 crore ($ 21.4 billion) with positive contributions from all key operating segments. Profit after tax increased by 7.3% Y-o-Y to Rs 79,020 crore ($ 9.5 billion).

What to expect from Reliance in Q1FY25?

Emkay Global On Reliance Q1FY25:

Reliance's O2C EBITDA is expected to fall 21% QoQ to Rs132.9 billion, while Upstream EBITDA is seen to decline 10% QoQ to Rs50.7 billion.

Further, Retail EBITDA is likely to increase 3% QoQ to Rs60.2 billion. In the digital business, Jio ARPU to rise 0.6% QoQ, 8 million sub additions in Q1FY25 with Jio EBITDA to grow 2% QoQ to Rs149.7 billion.

JM Financial On Reliance Q1FY25:

RIL's 1QFY25 EBITDA is likely to be down 7.4% QoQ to INR 394bn due to sharp 20% QoQ decline in O2C EBITDA driven by fall in refining & petchem margins; while Digital EBITDA is expected to be higher by 2.4% QoQ, Retail EBITDA is expected to be up only 2.2% QoQ and E&P EBITDA is expected to be down 8.5% QoQ.

Assumptions: a) O2C EBITDA to decline 20% QoQ to INR 134bn due to decline in GRM to ~USD 8/bbl (vs. implied GRM of ~USD 11.2/bbl in 4QFY24) driven by sharp fall in diesel and petrol cracks with refining throughput flattish QoQ at 16.1mmt; further, petchem margin is expected to decline QoQ; b) E&P EBITDA to decline 8.5% QoQ to INR 51bn due to rise in profit sharing with government as per PSC and some weakness in gas output and HPHT gas price (USD 9.87/mmbtu in 1QFY25 vs. USD 9.96/mmbtu in 4QFY24); c) Retail EBITDA is likely to grow by only 2.2% QoQ to INR 60bn; d) Digital EBITDA is expected to grow by 2.4% QoQ to INR 150bn on account of robust net subs additions of ~9mn QoQ and slight improvement in ARPU to INR 182.7 (from INR 181.7 in 4QFY24).

Kotak Institutional Equities On Reliance Q1FY25:

We expect RIL's consolidated EBITDA to decline by ~8% qoq, driven by weak O2C performance and muted growth in Digital services and organized retail. We expect RIL's standalone EBITDA to decline ~15% qoq on sequentially weaker refining margins, partly offset by a modest improvement in petchem spreads. In E&P, we expect ~4% qoq decline in EBIT on marginally lower realization and production.

We expect EBITDA of (1) R-Jio to increase ~2% qoq, driven by ~9.4 mn overall net subscriber adds (versus ~11 mn qoq) and blended ARPU flat at Rs182 and (2) retail to increase by modest ~2% qoq, driven largely by increased store footprint and operating leverage.

Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on the stock mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.