RIL Q3: Net Profit Climbs 11.7%, Intraday Gain of 4.7% – What’s Fueling This Growth?

Reliance Industries Limited (RIL), a titan in India’s corporate landscape, has reported an 11.7% year-on-year increase in net profit for Q3 FY25, taking it to ₹17,394 crore. On the same day, its stock saw an intraday gain of 4.7%, reflecting robust investor sentiment. What’s driving these stellar numbers, and what does this mean for stakeholders?

Let’s look into the sectoral performance and underlying factors fueling this growth, breaking it down step-by-step to clarify this financial update.

The Numbers Speak: A Snapshot of RIL’s Performance

RIL’s consolidated revenue for Q3 stood at ₹2,67,186 crore, registering a year-on-year growth of 7.7%. This was complemented by an all-time high EBITDA of ₹48,003 crore, a 7.8% increase from the corresponding quarter of the previous year. Additionally:

• Net Profit: ₹21,930 crore, up 11.7% YoY.
• Reliance Retail Revenue: ₹90,333 crore, an 8.8% YoY increase.
• Jio Platforms Revenue: ₹38,750 crore, up 19.2% YoY.
• Oil-to-Chemicals (O2C) Revenue: ₹149,595 crore, a rise of 6% YoY.

While the O2C segment faced headwinds, RIL’s retail and digital services businesses showed robust growth, contributing significantly to the overall performance.

Breaking Down the Key Growth Drivers

1. Reliance Retail: Dominance in the Consumer Space

Reliance Retail, RIL’s consumer-facing business, achieved an 8.8% Y-o-Y revenue growth to ₹90,333 crore in Q3 FY25. Sequentially, revenue grew by 18%, driven by productivity improvement initiatives and increased customer engagement during the festive season through new product launches and promotions. Key highlights include:

• EBITDA Growth: EBITDA rose by 10% YoY to ₹6,632 crore, with margins improving by 20 basis points to 8.3%.
• Store Network Expansion: By the end of the quarter, Reliance Retail’s store count had reached over 19,102, reflecting continued expansion.

• B2C Grocery Push: The business saw significant traction in its B2C grocery segment, driven by strong demand and enhanced distribution capabilities.
• E-Commerce and Promotions: Platforms like JioMart benefited from higher customer engagement, boosting online sales alongside in-store performance, particularly during the festive period. Source: Economic Tmes

2. Jio Platforms: Leading India’s Digital Revolution

Jio Platforms reported a 19.2% YoY increase in revenue to ₹38,750 crore, with EBITDA growing by 18.8% to ₹16,585 crore. The wireless subscriber base expanded to 482 million, supported by a tariff hike and increasing penetration of high-speed internet services. Key takeaways include:

• ARPU (Average Revenue Per User): Improved to ₹181.70 from ₹181.7 in the previous quarter.
• 5G Rollout: Jio continued to rapidly deploy 5G services, further solidifying its leadership position in the telecom sector.
• Digital Content Consumption: Increased data usage per customer boosted revenue.

3. Oil-to-Chemicals (O2C): Navigating Challenges

Segment Revenue for 3Q FY25 increased by 6.0% Y-o-Y to ₹ 149,595 crore ($ 17.5 billion) primarily on account of higher production meant for sale as compared to 3Q FY24 which had planned maintenance and inspection shutdown of major units. EBITDA for 3Q FY25 increased by 2.4% Y-o-Y to ₹ 14,402 crore ($ 1.7 billion) following a strong volume-led growth and higher polymer deltas.:

• Operational Efficiencies: Revenue growth was supported by robust domestic demand and product placement.
• Diversification: Reliance’s move to explore alternative energy sources, including hydrogen, is expected to provide long-term stability to this segment.

Why Did RIL’s Stock Surge by 4.7% Intraday?

The market’s positive reaction can be attributed to several factors:

1. Strong Overall Performance: The net profit and EBITDA exceeded analysts’ expectations, reinforcing investor confidence.
2. Retail and Digital Services Growth: Robust performance in these segments offset weaknesses in the O2C business, signaling diversified revenue streams.
3. Stock Resilience: RIL shares had been trading around ₹1,200 over the past few months despite a bonus issue in October. On Thursday, before the earnings announcement, the stock closed 1.31% higher at ₹1,268.70 on the BSE. This steady performance, coupled with the earnings beat, likely fueled the intraday surge.
4. Optimism Around Future Prospects: With ongoing investments in green energy, retail, and digital services, RIL continues to strengthen its position as a multifaceted conglomerate.

Source: NSE

Key Strategic Initiatives and Investments

1. Green Energy Expansion

Reliance’s focus on clean energy is a long-term growth driver. The company’s investments in hydrogen, solar, and other renewable sources align with global trends and regulatory support for sustainable practices.

2. Retail Business Transformation

Reliance Retail’s continued expansion into Tier 2 and Tier 3 cities, coupled with the integration of offline and online channels, positions it as a dominant player in India’s retail landscape.

3. Jio’s 5G Ambitions

As Jio aggressively rolls out 5G services, it is poised to capture a larger share of India’s burgeoning digital ecosystem, which includes smart devices, IoT, and digital entertainment.

Balance Sheet Insights

RIL’s outstanding debt stood at ₹3.5 lakh crore as of Q3 FY25, reflecting an increase of ₹14,116 crore over the September quarter. Meanwhile, cash and cash equivalents rose by ₹15,089 crore to ₹2.35 lakh crore during the same period. This resulted in a net debt of ₹1.15 lakh crore, marking a decline of ₹973 crore compared to the previous quarter. The company’s net debt-to-EBITDA ratio improved to 0.6 in the December 2024 quarter from 0.66 in the September 2024 quarter.
Source: Money Control 

Capital Expenditure (Capex)

Capital expenditure (excluding amounts incurred towards spectrum) for the quarter ended December 2024 was ₹32,259 crore. This was slightly higher than the ₹30,102 crore reported in the year-ago period but lower than the ₹34,022 crore spent in the September quarter. The investments reflect RIL’s continued focus on expanding its capabilities across various business segments.

Challenges to Watch

Despite the strong quarterly results, certain risks persist:

• Global Economic Uncertainty: Macroeconomic challenges and geopolitical tensions could impact demand and margins.
• O2C Segment Volatility: Continued pressure on refining and petrochemical margins may weigh on future performance.
• Competition: Rising competition in the telecom and retail sectors could affect growth trajectories.

Conclusion

RIL’s Q3 results underscore the strength of its diversified business model. Retail and digital services drive growth, while the O2C segment faces challenges. The stock’s 4.7% intraday gain reflects strong investor confidence in the company’s strategic direction and future potential.

As RIL continues to evolve, its ability to adapt to changing market dynamics and leverage opportunities in new-age businesses will be crucial.

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