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Revenues from Reliance’s oil-chemicals business fall 18% in the first quarter on fears of recession and a slowdown in demand

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Demand was impacted by destocking linked to recession fears and high interest rates, as well as a slower-than-expected ramp-up in Chinese markets. Year-over-year comparisons are skewed due to historic high fuel cracks in the first quarter of FY23, along with a dislocation in energy markets, RIL said in a regulatory filing.

Reliance Industries (RIL) petroleum-to-chemicals (O2C) business recorded an 18% drop in revenue year-on-year (YoY) to Rs 1.33 lakh crore, mainly due to a sharp decline in fuel cracks from exceptionally high levels in the corresponding quarter of last year. So was Rs 1.61 lakh crore reported in the prior year quarter. The company with the second-largest weighting on the Nifty 50 index released its April-June quarterly results on Friday, June 21.


For the O2C segment, revenue increased 3% sequentially.
Demand was impacted by destocking linked to recession fears and high interest rates, as well as a slower-than-expected ramp-up in Chinese markets. Year-over-year comparisons are skewed due to historic high fuel cracks in the first quarter of FY23, along with a dislocation in energy markets, RIL said in a regulatory filing.

During the quarter, consolidated EBITDA or earnings before interest, tax, depreciation and amortization stood at Rs 15,271 crore, down 23% year-on-year and down 6% quarter-on-quarter, in the O2C segment.

“O2C biz resilient despite global macro headwinds”

“The O2C business delivered resilient performance despite continued headwinds at the global macro level. The start of MJ field operations during the quarter will enhance India’s energy security, with total production from block KGD6 increasing to 30 MMSCMD in the coming months,” said Mukesh Ambani, President and CEO of Reliance Industries.

Sequentially, the flow decreased slightly to 19.7 MMT. Fuel cracks have corrected quarter-over-quarter and year-over-year, but remain above mid-cycle level with strong global demand.

Crack diesel averaged $15.6 a barrel versus $28.6 a barrel in the previous March quarter and $51.6 a barrel a year ago.

Gasoline cracks average $12.1 per barrel, compared to $15 per barrel in Q4 FY23 and $29.8 per barrel in Q1 FY23. The average ATF crack was $14 per barrel versus $26.5 per barrel in Q4 FY23 and $39.2 per barrel in Q1 FY23.

“It’s much better than expected, while we knew some of the old companies would struggle a bit in terms of growth and margins, those margins are also not something to complain about. Singapore GRMs were really down almost 50-55% on a quarterly basis anyway. So that was penciled in ash Diwan.

Meanwhile, the conglomerate’s net profit came in at Rs 16,011 crore, down 11% year-on-year for the three-month period, due to pressure in its O2C segment. Consolidated revenue declined by 5.3% year-on-year to Rs 2.11 lakh crore.

The board has recommended the payment of a dividend of Rs 9 per share, subject to shareholder approval.

Shares of Reliance Industries ended down 2.48% at Rs 2,555 apiece on NSE, ahead of the announcement of first quarter results. The stock is trading near its all-time high and has recovered nearly 30% from its March 2023 lows.

Investors on Dalal Street are now eyeing the company’s next annual general meeting (AGM) due to be held in August.

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