Reliance Industries Defies Forecasts with Strong Q4 Profit Surge

Reliance Industries Limited (RIL) has delivered a resilient performance in its Q4 FY2024-25 results, defying analyst expectations of a 5% year-on-year (YoY) decline in net profit. The company reported a consolidated net profit of ₹19,407 crore for the quarter ending March 2025, marking sequential growth from ₹18,540 crore in Q3. This outcome, driven by robust contributions from its telecom and retail segments, underscores RIL’s ability to navigate cyclical challenges in its oil-to-chemicals (O2C) business.

Segment Breakdown: Telecom and Retail Lead the Charge

While the O2C segment faced headwinds from weaker refining margins, Jio and retail emerged as growth engines.

• Telecom (Jio): EBITDA rose 16% YoY to ₹15,600 crore, supported by a 1% increase in subscribers to 488 million and higher average revenue per user (ARPU) of ₹205/month. Jio’s tariff hikes and expanded 5G services have solidified its dominance in India’s digital landscape.
• Retail: EBITDA grew 16% YoY to ₹6,600 crore, with margins improving to 7.5%—a reflection of cost efficiencies and demand resilience in essential goods.
• O2C: The segment lagged, as refining margins (CRIS) dipped to $5.5/bbl in Q4 vs. $9.2/bbl a year earlier. However, RIL’s vertical integration and chemical exports partially offset this pressure.

Key Drivers of Outperformance

1. Jio’s Digital Synergy: The telecom giant’s 5G rollout and digital services (e.g., JioMart, JioHealth) are creating cross-selling opportunities. Its ARPU growth signals strong customer engagement.
2. Retail Resilience: Despite inflationary pressures, RIL’s retail division maintained momentum, with same-store sales growth and strategic pricing.
3. Dividend Catalyst: The board’s decision to reinstate dividends—a first in three quarters—could boost investor sentiment and liquidity.

Risks and Considerations

• O2C Volatility: Oil prices and refining margins remain unpredictable. RIL’s long-term shift toward petrochemicals and renewables may mitigate this risk.
• Regulatory Hurdles: Jio’s expansion into digital payments and cloud services faces regulatory scrutiny in India’s evolving tech sector.

Investment Takeaways

RIL’s Q4 results highlight its diversified business model’s strength. The company’s 4% YoY revenue growth to an estimated ₹2.42 lakh crore and EBITDA of ₹43,580 crore signal operational stability. With a trailing P/E of 22x (vs. sector average of 25x) and a dividend yield of ~0.8%, RIL appears attractively valued for long-term investors.

Conclusion

Reliance Industries has demonstrated its mettle as a multi-sector leader, leveraging its telecom and retail divisions to offset cyclical challenges in energy. The Q4 net profit beat, coupled with Jio’s 16% EBITDA growth and retail’s margin improvement, positions RIL to capitalize on India’s digital and consumption boom. While O2C remains a near-term risk, RIL’s strategic focus on high-margin chemicals and its dividend restart suggest a compelling investment case.

For investors, RIL’s stock—up 12% YoY as of April 2025—offers a balance of growth and stability. With a 7.5% retail margin, 488 million Jio subscribers, and a dividend yield poised to rise, RIL remains a cornerstone for portfolios betting on India’s economic ascendancy.

Data as of April 25, 2025.