Reliance profit falls 25%, but Mukesh Ambani says he’s ‘optimistic’ about the year ahead

Reliance Industries, India’s most valuable company by market capitalisation, reported a 25% fall in quarterly net profit to Rs 23,196 crore on Friday. Even so, the number beat analysts’ average estimate of Rs 18,550 crore, and chairman Mukesh Ambani struck an upbeat note about the quarters to come.

“Reliance has made a steady start to FY27, with all businesses delivering strong operating performance despite continuing geopolitical tensions and volatile commodity markets. This makes me optimistic about the year ahead as we advance our new energy projects and the Jio IPO,” Ambani said in a statement accompanying the results.

The drop in profit was not a sign of weaker operations. It was mainly due to a one-off gain of Rs 8,924 crore that Reliance had booked a year earlier from a stake sale in Asian Paints, a gain that had no equivalent this quarter. Stripped of that comparison effect, the underlying business told a different story: revenue rose 25% to Rs 3.1 lakh crore, and Ebitda climbed 10% to Rs 51,403 crore, even as expenses rose faster, up 27% to Rs 2.9 lakh crore.

Jio, the telecom and digital services arm Ambani specifically flagged in his statement, posted a 16% rise in Ebitda to Rs 21,255 crore, helped by a 150 basis point margin expansion and a 3% rise in average revenue per user to Rs 216. The unit, launched in 2016, had 533 million customers as of June 30, making it the world’s second-largest telecom operator by subscribers. Data traffic grew 27% during the quarter, while voice traffic rose 2%.

The oil-to-chemicals (O2C) business, which accounted for 33% of Reliance’s total operating profit, saw Ebitda rise 17% year-on-year to Rs 17,010 crore, driven by stronger transportation fuel and downstream margins, higher crude sourcing from Russia and Latin America, and cheaper ethane feedstock. Higher crude, freight and insurance costs weighed on margins, along with losses from holding domestic fuel prices steady and the reintroduction of a special additional excise duty on diesel, petrol and aviation fuel.

Reliance closed the quarter with a cash balance of Rs 2.46 lakh crore against net debt of Rs 1.22 lakh crore, and capital expenditure of Rs 38,682 crore that funded, in part, its green energy build-out and consumer business expansion.

Wikimedia Commons/by World Economic Forum