Reliance Industries Ltd (RIL) showcased a strong performance in its Q3 results, driven by robust contributions from the retail and Oil-to-Chemicals (O2C) segments. The company gained 2.6% on the bourses, defying broader market weakness, reflecting investor confidence in its diverse growth strategies.
Key Takeaways from Q3 Performance
Retail Segment
The retail business benefited from a festive demand surge, contributing to 7% revenue growth at ₹79,595 crore. Operating margins before depreciation and amortization (EBITDA) improved by 20 basis points year-on-year to 8.3%.
- Store Expansion: RIL added 156 stores, taking the total count to 19,102, although the net store area declined by 2 million square feet, indicating a shift towards profitable growth.
- Online vs Offline: Digital commerce’s share rose to 18% (from 17% sequentially), but the offline segment outpaced with a 10% year-on-year growth, led by strong demand in grocery, electronics, fashion, and lifestyle.
- Future Outlook: Retail growth is expected to normalize in the next quarter as the festive demand fades.
Digital and Telecom Segment
RIL's telecom arm, Jio, continues to be a growth driver, though Average Revenue Per User (ARPU) growth was slightly below expectations.
- Subscriber Growth: Jio added 3.3 million subscribers, with 2 million coming from the home broadband category, reflecting increased penetration.
- ARPU Expansion: ARPU grew 4.2% sequentially, below the estimated 5-5.5%, highlighting limited benefits from recent tariff hikes.
- 5G Adoption: The 5G subscriber base expanded 14.9% sequentially to 170 million, contributing 40% of data usage. Future ARPU growth hinges on new plans and wider 5G adoption, with the next major tariff revision expected by December 2025.
- Oil & Gas Challenges: Lower production from the KG D6 basin and weaker realizations impacted revenue and EBITDA margins.
- O2C Segment: Despite falling cracks in transportation fuels due to lower Chinese demand and ample global supply, strong domestic demand and higher refining throughput helped cushion the impact.
As RIL continues to leverage its diversified portfolio and strategic initiatives, the company remains a standout in India's corporate landscape, poised for sustained growth across its core businesses.
