Reliance reported its highest-ever quarterly profit, mainly because the fuel crisis has made refining very profitable. Its retail business, which investors have long seen as its main growth engine, had a weak quarter: profit fell by almost a quarter.
Reliance Industries reported record results for the September quarter. Consolidated profit, including associates and joint ventures, rose 33.8% to ₹29,550 crore. Profit attributable to shareholders rose 40.6% to ₹25,548 crore. Consolidated EBITDA reached a record ₹62,409 crore, up 23.9%. Revenue rose 6.8% to ₹3.31 lakh crore.
The breakdown shows very different results across the businesses.
Refining drives the record
The oil-to-chemicals (O2C) business, which covers Reliance’s Jamnagar refineries and petrochemicals, had its best quarter on record. Segment EBITDA rose 67.9% to ₹25,203 crore. The company said its first-half performance puts O2C on track for annual EBITDA above ₹80,000 crore.
The near-closure of the Strait of Hormuz has reduced the supply of refined products such as diesel and jet fuel from Gulf refineries. Diesel prices have risen sharply in Europe and the US. Reliance, which runs the world’s largest single-site refining complex and exports large volumes of fuel, is earning very high margins on every barrel it processes. It has also bought discounted crude where available.
On a standalone basis, which is mostly the refining business, profit rose 68.2% to ₹15,354 crore.
Retail is the weak spot
Reliance Retail’s gross revenue rose only 6.4% to ₹91,716 crore. EBITDA fell 8.6% and profit fell 24%.
That is unusual for a business that has grown at double-digit rates for years. Reliance described this as an investment phase and said there was no major festive activity in the quarter, since the festive season fell in October this year.
The timing explanation is only partly convincing. Trent, the main listed competitor, grew revenue 22% and profit 25% in the same quarter. HUL grew volumes 7%. Reliance Retail’s weakness looks specific to Reliance, likely reflecting the cost of rapid store expansion, quick commerce investment and competition in grocery and fashion.
Jio: steady
The digital business, mostly Jio, grew EBITDA 17.7% to ₹22,223 crore. Jio’s operating revenue rose 10.8%. These figures match Jio Platforms’ own results last week: solid, with no tariff increase. JioStar, the media joint venture, grew JioHotstar’s user numbers but remained only modestly profitable.
The oil and gas exploration business was weaker, because of lower output from the KG-D6 gas field.
What now
For a decade, the investment case for Reliance has been that its consumer businesses, retail and Jio, would eventually replace refining as the main source of profit. This quarter went the other way. Refining, the older business, delivered most of the growth because of the war, while retail went backwards.
Refining profits depend on the Gulf crisis. When the strait reopens and product markets normalise, O2C margins will fall sharply. Oil already fell more than 3% this morning on hopes for diplomacy. If retail has not recovered by then, Reliance’s profit growth will slow considerably.
The listing of Jio Platforms now lets the market value Reliance’s stake in Jio directly. The next few quarters will show whether Reliance Retail can return to growth before the refining boost fades.
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