Oil-to-chemicals business powers Reliance Industries' record quarterly net profit, up 34% to ₹29,550 crore

Mumbai: Mukesh Ambani-led Reliance Industries Ltd (RIL) beat estimates to post record consolidated net profit for the September quarter, up 34% to ₹29,550 crore from the year before, as stronger growth in the oil-to-chemicals (O2C) and digital businesses offset a relatively subdued performance in retail. RIL posted a net profit of ₹22,092 crore in the corresponding quarter last year.

Revenue from operations surged 28.5% year-on-year to a record ₹3.38 lakh crore, reflecting higher contributions across businesses.

A Bloomberg poll had pegged consolidated net sales at ₹21,367.9 crore on revenue of ₹3.13 lakh crore.


The company board also approved a plan to raise as much as ₹15,000 crore through the private placement of non-convertible debentures in one or more tranches.

"During the second quarter, our businesses delivered a strong performance despite a complex operating environment," said Mukesh Ambani, RIL chairman and managing director.

Also Read: Reliance looks to Latin America, North America and the Mediterranean as Middle East oil disruptions put supply chains under pressure

Ebitda Rises 15%

Commodity markets remained volatile while geopolitical tensions continued to weigh on global supply chains. "Against this backdrop, the domestic orientation of our portfolio, combined with operational discipline and versatility of our integrated businesses, helped Reliance navigate external volatility effectively," Ambani said.

Ebitda during the quarter climbed 15% from ₹54,067 crore. However, the consolidated ebitda margin contracted by 60 basis points to 17.2% from 17.8% a year ago, although it was wider than 15.9% in the preceding quarter.

RIL's O2C business emerged as the biggest driver of quarterly earnings growth, reporting a 68% increase in Ebitda to a record ₹25,203 crore from ₹15,008 crore in the year before.

"Our O2C business delivered a particularly strong performance this quarter, led by tight fuel markets, improved downstream petrochemical deltas and firm domestic demand," said Ambani, adding that RIL's ability to optimise feedstock sourcing and product placement along with operations across the value chain enabled the company to improve margin capture.

Also Read: Reliance Retail Q2 Results: Revenue up 6%, but late festive season, digital spends hit profit

"This performance underscores the strength and resilience of our O2C business," he said.

O2C revenue increased by 44.2% to ₹231,601 crore, led by high energy prices. The West Asia conflict has disrupted energy market supply chains, resulting in a 40.6% increase in crude oil prices and a 50-78% increase in transportation fuel prices from the year before.

"O2C led the charge with record Ebitda," RIL CFO Srikanth Venkatachari said on an analyst call. "Of course, we benefited from the unprecedented tightness that we saw in energy markets, downstream cracks and fuel cracks."

The company said revenue growth was further aided by a 25-35% rise in prices for most downstream chemical products from a year ago. Diesel refining cracks rose 252% to $65.8 per barrel, while jet fuel cracks increased 268% to $59.3 per barrel. Gasoline cracks nearly tripled to $24.9 per barrel.