Reliance Industries Faces Pressure in Oil Sector, Non-Oil Operations Show Promise
Focus shifts to RIL's non-oil operations
The Economic TimesImage: The Economic Times
Reliance Industries Limited (RIL) reported a decline in its oil and gas segment, impacting overall earnings, while its non-oil sectors, including telecom and retail, showed resilience. Analysts have adjusted target prices, reflecting a cautious outlook for the June quarter amid ongoing geopolitical tensions in West Asia.
- 01RIL's oil-to-chemicals segment saw a 4% decline in operating profit.
- 02Jio Platforms reported an 18% growth in Ebitda, driven by telecom and digital services.
- 03Retail segment Ebitda growth was limited to 3%, despite 11% revenue growth.
- 04Analysts have cut RIL's target price by over 3% to ₹1,655.
- 05The telecom segment's average revenue per user (ARPU) increased to ₹214.
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Reliance Industries Limited (RIL) experienced challenges in its oil-to-chemicals (O2C) division, which accounts for 57% of its revenue, reporting a 4% year-on-year decline in operating profit before depreciation and amortization (Ebitda). This decline is attributed to geopolitical tensions in West Asia, leading to supply disruptions and a drop in margins to a nine-quarter low of 7.9%. Despite these challenges, RIL's non-oil operations provided some cushion. Jio Platforms, encompassing digital and telecom services, achieved an 18% growth in Ebitda, while the retail segment saw a 3% increase in Ebitda, supported by an 11% rise in revenue. Analysts from Motilal Oswal Financial Services have revised their target price for RIL down by over 3% to ₹1,655, citing the need for sustained growth in retail and potential tariff hikes as key factors influencing the stock's performance. The stock was last traded at ₹1,327.7, reflecting a 1.2% decrease from the previous day. Looking ahead, RIL's new energy initiatives, including a 40 GWh GIGA factory expected to begin operations this year, may contribute positively to revenue by FY30.
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The performance of RIL's non-oil sectors may influence job stability and growth in the telecom and retail sectors, benefiting consumers through enhanced services and offerings.
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