An Ambanian dream: RIL wants to cross ₹1 lakh crore profit before massive IPOs

Billionaire Mukesh Ambani seems to have set a new goal for Reliance Industries (RIL), which is looking to unlock value with public offering of shares in its high-value businesses like retail and telecom. According to sources, RIL management wants to hit ₹1 lakh crore net profit before it separates businesses with the initial public offerings (IPOs).

Considering its ₹80,787 crore consolidated profit in FY25, RIL is nearly ₹20,000 crore short of hitting the milestone, a feat none of the Indian companies have achieved yet. However, RIL leapfrogged a major portion of the shortfall in the first quarter of FY267 with a net profit addition of ₹13,000 crore. A major portion in the jump can be attributed to the realisation of ₹8,924 crore from the sale of stake in Asian Paints.

It was Mukesh Ambani’s decision to sell RIL subsidiary, Siddhant Commercials’ 4.9% stake in the paint maker, said sources. “It is an early move to achieve the target without many hassles,” said another person in the know.

The company posted a record net profit of ₹30,681 crore from the business operations in April-June period, compared to ₹17,448 crore in the same quarter in FY25. The profit includes other income of ₹15,119 crore. The other income also includes the interest from bank deposits and debt instruments, besides the gain from Asian Paints stake sale.  

“If we can improve the bottom line by ₹2,300 crore on an average in all the remaining three quarters of FY26, RIL will be able to achieve the feat. It is not a tough task,” said an executive. The RIL group is expected to demerge the subsidiaries --- Reliance Retail Ventures Ltd (RRVL) and Jio Platforms Ltd (JPL)--- and unlock value with IPOs in FY27-FY28. According to the earlier plan, as Mukesh Ambani said in the 2019 shareholder meeting, the IPOs were planned by FY25.

RIL has been focused on improving the business performance of its subsidiaries to make them IPO-ready. In Q1, Jio posted 24.8% rise in profit to ₹7,110 crore, while Reliance Retail registered 28.3% growth to ₹3,271 crore. Jio has added 9.9 million customers in the quarter and increased its subscriber base to 498 million. The company’s 5G subscriber base crossed 200 million. When data traffic increased by 24%, the average revenue per user (ARPU) improved to ₹208.8 from ₹181.7 year-on-year.

The retail business, which has been rationalising the stores considering the profitability, has opened 388 new stores in the first quarter while closing 136 stores. It increased the number of stores to 19,592. As part of cleaning up process, Reliance Retail closed down 2,155 unprofitable stores in FY25, however, opened 2,659 new stores with additional space and new offerings.

RIL’s refining and petrochemicals business reported an earnings before interest, tax, depreciation and amortisation (EBITDA) ₹14,511 crore, improving it by 10.8% y-o-y. According to the company, the revenues were supported by higher sale of transportation fuels through Jio-bp retail network. Jio-bp operates a country-wide network of 1,991 outlets.

Achieving ₹1 lakh crore net profit by any company will be a landmark achievement in India’s corporate history. In FY25, RIL was the largest profit generator in the country with ₹80,787 crore net profit, while SBI reported ₹77,561 crore and HDFC Bank ₹70,792 crore. After removing the profit attributable to non-controlling interest, RIL’s profit reduces to ₹69,648 crore.

The profit attributable to non-controlling interest represents the portion of profit belonging to minority shareholders in subsidiaries. For instance, Google and Meta hold stakes JPL along with private equity giants. The case is same with RRVL. BP Plc owns around 30% stake in RIL’s hydrocarbon assets. Their share of profit comes under non-controlling interest. ICICI Bank and TCS are the other major profit generators in the country.