Improved average revenue per user (ARPU) in its telecom business, a recovery in the oils-to-chemicals business, and modest growth in the retail arm are expected to drive Reliance Industries’ performance in the third quarter. Net profit is expected to increase 3 per cent year over year, and EBITDA will increase 5 per cent. 

The growth rates are seen to be stronger sequentially. RIL will announce its Q3 results on January 16.

According to Nomura, the conglomerate’s earnings before interest, tax, depreciation, and amortisation are at ₹42,500 crore, up 9 per cent on-year sequentially. This growth is driven by Jio’s growth and better performance by the O2C vertical, which contributes close to 60 per cent of RIL’s revenues, though both telecom and retail are growing fast.

Oils to Chemicals

Analysts expect the O2C business to be stronger in Q3, with refining margins having improved. “Refining margins are expected to improve sequentially, driven by strengthening product cracks,” said YES Securities in its earnings preview.

It said it expected refining throughput to increase 4.3 per cent YoY, but down 3.4 per cent sequentially to 17.1 mmt, with gross refining margin seen at $10.8 per barrel.

The gains in refining margins are, however, expected to be offset by weaker petchem, leading to flat segmental EBITDA, said Goldman Sachs, which the refining growth will be driven by better ex-China supply-demand dynamics and a more favourable cost base.

“On petchem, we see a longer recovery trajectory for margins due to unresolved supply and demand issues for olefins and certain aromatics (PTA and PET) where RIL has higher exposure,” GS said, adding that it expected RIL to continue underperforming industry margins.

GRMs have started to reverse and are no longer a drag to EBITDA margins and Reliance will benefit from a weaker rupee, said Bernstein.

Telecom

Reliance Jio is seen to have had a strong quarter and Bernstein said, “Telecom will remain the bright spot as ARPU hike reflect in earnings with capex continues downward trend.”

GS forecast Jio’s revenue to have risen 6 per cent sequentially and 19 per cent YoY to ₹30,100 crore. Reported ARPU is seen at ₹209, with wireless ARPU at ₹197 driven by residual impact of tariff hikes.

Retail

Consumer demand is still muted, but Reliance Retail is expected to revert to double-digit EBITDA growth after the company’s store rationalisation exercise.

Nomura expects modest growth in retail and sees the core retail revenue growth at 2 per cent on the year at ₹58,000 crore and EBITDA up 5 per cent QoQ at ₹6,380 crore. It expects margins to moderate to 7.2 per cent.

Urban consumption slowed in the first half of FY25, and some indicators turned positive in the third quarter, most likely due to the demand seen during the festival season.

There has been an improvement in trends across discretionary consumption companies, translating into an improvement in same-store sales growth and like-for-like growth. “We expect improvement in the YoY sales growth trend for Reliance Retail,” said GS.

Analysts will seek commentaries on its new energy business, which is expected to commence operations in 2025.