Reliance Q1 net profit down 22% to ₹20,946 crore, EBITDA rises 11%

Profit dip masks strong operating performance

Reliance Industries Ltd (RIL) reported a 22% decline in consolidated net profit for the first quarter of the current fiscal, coming in at ₹20,946 crore. The drop in bottomline came despite a sharp rise in revenue and record EBITDA, as higher depreciation and finance costs ate into earnings.

The company's revenue from operations jumped 25% year-on-year, surpassing ₹2.5 lakh crore. EBITDA rose 11% to a record level, driven by robust performance across its oil-to-chemicals (O2C), telecom, and retail verticals. The numbers broadly beat analyst estimates, with some brokerages projecting a net profit in the range of ₹19,500-₹20,500 crore.

O2C shines on crude price tailwind

The O2C segment, which includes refining and petrochemicals, saw its revenue surge 30% to over ₹2 lakh crore. The sharp rise in global crude oil prices during the quarter boosted inventory gains and product margins. RIL's refining margins remained healthy, aided by strong demand for diesel and gasoline in key export markets.

Petrochemical margins, however, faced some pressure due to softer spreads on polymers and polyester intermediates. The segment's EBITDA margins improved sequentially, indicating better operational efficiency despite volatile feedstock costs.

Jio and retail drive digital and consumer momentum

Reliance Jio Infocomm posted a solid quarter, adding subscribers and increasing average revenue per user (ARPU). The telecom arm's revenue grew over 15% year-on-year, helped by tariff hikes and higher data consumption. Jio's net profit also rose, though the company did not break out standalone figures in the group release.

Reliance Retail continued its expansion spree, with revenue crossing ₹80,000 crore for the quarter. The segment saw strong footfall across grocery, electronics, and fashion formats. EBITDA margins held steady, reflecting disciplined cost management even as the retailer opened new stores across tier-2 and tier-3 cities.

What analysts are saying

Market watchers termed the results "a mixed bag" but noted that the record EBITDA and strong O2C performance were positives. The 22% fall in net profit was largely expected due to higher depreciation from new asset capitalisation and a spike in finance costs linked to debt servicing for expansion projects.

Several brokerages have maintained a 'buy' or 'outperform' rating on the stock, with target prices in the range of ₹3,200-3,500. The company's focus on reducing net debt and improving free cash flow generation has been well received.

What to watch next

Investors will now keenly watch the management's commentary on capital expenditure plans for the remainder of the year, especially in new energy and green hydrogen. The trajectory of O2C margins amid global recession fears and the pace of Jio's 5G monetisation will also remain key triggers for the stock in coming quarters.