Reliance Industries Ltd (RIL), the Mukesh Ambani-led conglomerate, is set to announce its second-quarter (Q2) financial results on October 14, 2024. The company's performance in the refining and petrochemical (O2C) segment is expected to be a major focus point, as analysts predict a weak quarter due to lower refining and petchem margins. Despite this, the retail and digital segments are anticipated to show resilience and strong growth, driven by recent tariff hikes and operational efficiencies.
RIL's Q2 earnings are expected to be influenced by several factors. The company's oil-to-chemicals (O2C) segment, which includes refining and petrochemical businesses, is likely to see a decline in Ebitda due to the negative trajectory of benchmark Singapore gross refining margins, which fell 62% year-on-year in the quarter ended September 30, 2024 . This decline is partly offset by the growth in digital Ebitda, which is expected to rise 9.4% quarter-on-quarter due to tariff hikes .
Reliance Jio, a subsidiary of RIL, is expected to post a strong and steady quarter. Analysts anticipate Jio's Ebitda to rise 12% and 6% on an annual and sequential basis, respectively, driven by higher average revenue per user (ARPU), which is expected to grow 5% . This growth in ARPU is set to offset the 1% quarter-on-quarter moderation in subscriber base, according to Nuvama .
RIL's consolidated Ebitda is expected to fall sequentially in the second quarter of financial year 2025, mainly due to the weak performance of the O2C segment. However, this decline will be partly offset by healthy growth in the retail and digital segments. The company's consolidated revenues are expected to be muted, with a 2.2% quarter-on-quarter growth, according to consensus estimates of analysts tracked by Bloomberg .
The company's net profit is expected to see an over 20% uptick, as per Bloomberg estimates. However, the overall profit figure is anticipated to decline by 11-13% year-on-year (YoY) for the September quarter, with net sales remaining flattish .
RIL's stock has been under pressure ahead of the Q2 earnings announcement. The shares of the company have swung between gains and losses as investors await the financial results. Despite this volatility, the stock has risen 17.2% over the last 12 months and 6.3% on a year-to-date basis .
The upcoming Q2 results are significant for RIL as they coincide with the company's plans for a major bonus share issuance. The Board of Directors has approved the issuance of bonus shares in a 1:1 ratio, which will be the sixth such issue since RIL's initial public offering (IPO) . This move is expected to boost shareholder value and provide an early Diwali gift to investors.
Investors will be keenly watching for insights into RIL's performance and future outlook, especially in light of the recent bonus shares and ongoing market dynamics. The company's ability to manage its O2C segment and maintain strong growth in its retail and digital businesses will be crucial in determining its future trajectory.
For traders looking to capitalize on the Q2 results, Rupak De of LKP Securities provides valuable insights on how to trade RIL on results day. He also suggests three stock ideas that could potentially benefit from the upcoming earnings announcement .
In conclusion, RIL's Q2 results will be a critical milestone in the company's financial journey. The performance of the O2C segment, coupled with the resilience of the retail and digital segments, will shape the future direction of the company. As investors and traders await the announcement, it is essential to stay informed about the key factors influencing RIL's financials and market dynamics.
