Reliance Industries Ltd., led by Mukesh Ambani, reported profits that missed analyst expectations due to low margins in a challenging operating environment for its energy businesses. Net income at India’s largest company by market value dropped 5.4% to 151.4 billion rupees ($1.8 billion) for the quarter ended June 30, compared to the same period last year, according to a recent exchange filing. This figure fell short of the 174.17 billion rupees profit forecasted by a Bloomberg survey of analysts.
This marks the fifth consecutive quarter where Reliance’s earnings have underperformed brokerage estimates, largely due to the weak performance of its oil-to-chemicals (O2C) businesses. Despite this, the conglomerate reported a 12% increase in revenue to 2.36 trillion rupees, exceeding analyst expectations. However, total costs surged 14% to 2.17 trillion rupees.
“The deep integration and flexibility built into our O2C business model helped mitigate the impact of the challenging operating environment,” Ambani stated. “The business faced challenges from lower fuel cracks, tepid global demand, and the ramp-up of new refineries.”
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The weak earnings come after the company invested $60 billion between 2021 and 2023—its shortest investment cycle in decades—on projects like expanding the 5G telecom network and building giga factories for green energy. A July 1 note from Morgan Stanley predicted a significant payoff, suggesting Reliance could add $100 billion in market value as new cash flows emerge, business cycles improve, and its green energy and retail units capture a larger market share. The stock has already increased by 20% this year.
Geopolitical tensions in the Middle East and Russia, disruptions to the Red Sea transit, and the volatile crude oil market will continue to pose challenges, said Reliance’s Chief Financial Officer V. Srikanth in a media call. However, he noted that fuel cracks could improve soon due to increased US demand, a stronger recovery in international aviation, and a potential reinstatement of the ban on Russian gasoline exports.
Goldman Sachs analysts, in a July 10 note, said the pullback in refining margins is likely temporary, expecting a recovery in the July-September quarter as Asian refiners reduce run rates under margin pressure.
Meanwhile, Ambani’s consumer businesses—Reliance Jio Infocomm Ltd. and Reliance Retail Ltd.—continue to perform well, cementing the group’s dominance in the entertainment space. Reliance Jio, India’s largest wireless operator, is expected to see a revenue boost in the September quarter after announcing a long-awaited tariff hike at the end of June. This development supports a potential public listing in 2025 at a $112 billion valuation, according to Jefferies.
Reliance Retail is expanding into new formats, such as its beauty platform Tira, and is planning its own brands in food and personal care. It is also introducing Chinese fast fashion brand Shein.
Investors are eagerly awaiting Ambani’s next set of business milestones, which he is expected to announce in his annual address to shareholders. While no date has been announced, this speech has become a high-profile event akin to Warren Buffett’s annual letters to Berkshire Hathaway shareholders.