Mukesh Ambani's Reliance Industries Reports 5.4% Profit Decline, Its Fifth Consecutive Quarter Drop

By Thea Felicity

Jul 19, 2024 12:30 PM EDT

A worker walks past the signage of Reliance Industries Limited (RIL) at the site of an upcoming highrise at the Bandra Kurla Complex business district in Mumbai on August 4, 2016. India's GDP expanded 7.6 percent in 2015-16, making it the fastest-growing major economy in the world.
(Photo : INDRANIL MUKHERJEE/AFP via Getty Images)

Billionaire Mukesh Ambani's Reliance Industries Ltd. has reported a 5.4% decline in profit for the quarter ending June 30, falling short of analyst expectations.

In a report by Bloomberg, the company's net income dropped to 151.4 billion rupees ($1.8 billion), missing the projected 174.17 billion rupees. ($2.07 billion). This marks the fifth consecutive quarter where earnings have failed to meet forecasts, primarily due to ongoing difficulties in the oil-to-chemicals (O2C) sector.

While Reliance Industries managed to boost its revenue by 12%, bringing it to 2.36 trillion rupees, it faced increased financial pressure because its total costs grew by 14%, reaching 2.17 trillion rupees. The company's refining and petrochemical units experienced difficulties due to reduced profit margins from fuel and weak global demand.

Mukesh Ambani, the company's leader, attributed these struggles to a tough operating environment and delays in the expansion of new refineries.

Reliance's Investment Push

The profit decline follows Reliance's aggressive $60 billion investment strategy between 2021 and 2023, aimed at expanding its 5G telecom network and developing green energy projects.

Analysts from Morgan Stanley earlier this year had anticipated a massive return on these investments, projecting a potential increase of $100 billion in market value, although recent performance has been affected by collapsing refining margins and slower growth in key markets such as China and the U.S.

In contrast to its struggling O2C unit, Reliance's consumer businesses, including Reliance Jio and Reliance Retail, have performed well. Reliance Jio, India's largest wireless operator, is expected to benefit from a recent tariff hike, which could bolster its revenue in the upcoming quarter.

Similarly, Reliance Retail is expanding its offerings and plans to feature Chinese fashion brand Shein, potentially enhancing its market presence.

Investors are eagerly awaiting Mukesh Ambani's annual shareholder address to announce key initiatives.