Summary of the Reliance Industries Q2 FY25 conference call
- Consolidated Performance:
- Revenue: Rs. 2,58,027 crores (up 0.8% YoY)
- EBITDA: Rs. 43,934 crores (down 2% YoY)
- PAT: Rs. 19,323 crores (down 2.8% YoY)
- Robust growth in digital services and upstream, offset by weak O2C performance
- Retail showed steady performance with focus on enhancing customer proposition and strengthening capabilities
- Digital Services (Jio):
- Revenue: Rs. 31,709 crores (up 18% YoY)
- EBITDA: Rs. 15,931 crores (up 18% YoY)
- Subscriber base: 478.8 million (slight decline due to SIM consolidation)
- ARPU: Rs. 195.1 (up 7.4% YoY)
- 148 million subscribers migrated to 5G, contributing 34% of wireless data traffic
- Total data traffic: 45 Exabytes (up 24% YoY)
- Launched JioAirFiber, reaching 2.8 million subscribers
- Introduced JioAICloud and Jio Brain AI development platform
- Expanded enterprise offerings including SIP-based voice services and managed WiFi
- Retail:
- Revenue: Rs. 76,302 crores (down 1.1% YoY)
- EBITDA: Rs. 5,850 crores (up 0.3% YoY)
- PAT: Rs. 2,935 crores (up 5.2% YoY)
- EBITDA margin from operations: 8.5% (up 40 basis points)
- Opened 464 new stores, total count 18,946
- Total operational area: 79.4 million sq ft (up 11%)
- Focused on streamlining operations and improving margins
- Digital and new commerce contribution: 17% of total revenues
- Entered partnership with Delta Galil for lingerie business
- Launched ASOS in India
- Expanded Yousta format to 50 stores
- Launched first Armani/Caffè in India
- Oil & Gas (E&P):
- Highest quarterly EBITDA: Rs. 5,290 crores
- EBITDA margin: 85% (up 1,300 bps YoY)
- Steady production from KGD6 at 28.5 million SCM
- Increased production from CBM wells
- Ceiling price for gas revised to $10.16/MMBtu for second half of FY25
- O2C (Oil to Chemicals):
- Revenue: Rs. 1,56,000 crores (up 5% YoY)
- EBITDA: Rs. 12,413 crores (down 24% YoY)
- Impacted by weak demand and lower margins in downstream chemicals
- Transportation fuel cracks down ~50% YoY
- Benefited from ethane cracking economics and improved domestic fuel retailing
- Domestic fuel retailing volumes up 28% YoY
- Won Global Water Tech award for smart water and water conservation project in Jamnagar
- Operational Highlights:
- Continued investments in technology to improve customer experience and infrastructure
- Expanded digital commerce and hyperlocal deliveries through store network
- Launched new product categories and expanded merchant base in own brand business
- Steady growth in jewellery business despite higher gold prices
- Expansion of premium formats like FreshPik and Fresh signature
- Scaling up of consumer brands business with 250%+ YoY growth in general trade revenues
- Balance Sheet and Investments:
- Strong cash flow and liquidity position maintained
- CAPEX at Rs. 34,000 crores, covered by cash profits
- Continued investments in technology, supply chain, and distribution infrastructure
- Future Outlook (Detailed):
a) Digital Services:
- Expect continued growth in 5G adoption and data consumption
- Focus on expanding JioAirFiber services and targeting 1 million new home connections per month
- Further development and commercialization of AI services through JioAICloud and Jio Brain
- Continued expansion of enterprise offerings and SMB segment penetration
b) Retail:
- Anticipate strong growth momentum in festive season (October-November)
- Expect to revert to industry-leading growth rates after 1-2 quarters of streamlining operations
- Continue expansion of Yousta format and other new store concepts
- Focus on improving design capabilities and reducing design-to-shelf cycle
- Expansion of premium and luxury brand portfolio, including F&B offerings
- Further scaling of consumer brands business and expansion of distribution network
c) Oil & Gas:
- Expect improvement in gas production, particularly from CBM
- Anticipate higher gas prices in the second half of FY25
- Forecast strong gas demand due to potential harsh winter and delay in new LNG terminal startups
d) O2C:
- Expect continued volatility in oil prices and downstream product margins
- Anticipate potential improvement in margins if economic stimulus measures are implemented, particularly in China
- Monitor geopolitical factors and OPEC policies that may impact supply and demand dynamics
- Focus on operational optimization and cost management to mitigate margin pressures
e) Overall Business Strategy:
- Continue strengthening of tech platforms across all business segments
- Maintain focus on streamlining operations and calibrated approach to B2B business
- Expect underlying business themes to remain strong, with potential volatility in the next 1-2 quarters
- Anticipate return to industry-leading momentum across segments after current optimization phase
f) Market and Economic Factors:
- Monitor global economic conditions, particularly in China, US, and EU, which may impact demand
- Watch for potential monetary policy changes and economic stimulus measures in key markets
- Prepare for possible impact of rising EV penetration on gasoline demand, particularly in China
- Anticipate potential growth in air travel and consequent increase in jet fuel demand
g) Sustainability and Innovation:
- Continue focus on water conservation and sustainability initiatives across operations
- Further development of AI capabilities and integration into various business segments
- Explore new opportunities in renewable energy and circular economy initiatives
