Reliance Infrastructure posts a stellar Q4 FY25 profit of ₹4,387 Cr and clears ₹3,300 Cr in debt, becoming debt-free. But shares still dipped nearly 5%. Here’s why.
Reliance Infrastructure Hits Debt-Free Status in FY25 — But Market Responds with a Sell-Off
Reliance Infrastructure Ltd., a flagship entity of the Anil Ambani-led Reliance Group, has pulled off a significant financial turnaround in FY25. The company stunned markets by becoming debt-free on a standalone basis, repaying a massive ₹3,300 crore during the fiscal year. This move, which strengthens the company’s balance sheet and long-term viability, was announced alongside its stellar Q4 FY25 results.
Yet, despite this positive news, the company’s stock price dropped nearly 5% on Monday, May 26, raising eyebrows among investors. What explains this seemingly paradoxical market reaction?
Let’s break it down.-
Debt-Free Milestone: A Game-Changer
Reliance Infrastructure’s announcement that it has cleared all standalone debt from banks and financial institutions marks a critical milestone in the company’s revival journey. The ₹3,300 crore debt reduction in FY25 helped the company reach a zero-debt position — a major achievement in an era where corporate debt remains a key risk factor for many Indian firms.
This strategic move not only improves Reliance Infra’s credit profile but also opens the door for future investments and expansions across its core infrastructure sectors.
Q4 FY25 Results: From Losses to Blockbuster Profits
The company reported a consolidated net profit of ₹4,387 crore in Q4 FY25, a dramatic turnaround from the ₹3,298 crore loss in Q3 FY25 and ₹220 crore loss in Q4 FY24. That’s not just a recovery — it’s a full-blown rebound.
On the operational front, EBITDA (adjusted for exceptional income) stood at ₹8,876 crore for the quarter, representing a 681% increase over the previous quarter’s ₹1,136 crore. Such numbers indicate significant operational gains, likely resulting from internal cost control measures, better asset utilization, and improved income from infrastructure verticals.
The company’s consolidated net worth also rose by 44%, reaching ₹14,287 crore by March 31, 2025, compared to ₹9,899 crore in the previous quarter. This underlines the strong financial health Reliance Infra has built during the year.
FY25 Annual Performance: A Complete TurnaroundFor the full fiscal year 2025
FY25 Annual Performance: A Complete TurnaroundFor the full fiscal year 2025
Consolidated net profit: ₹4,938 crore (vs. ₹1,609 crore loss in FY24)
EBITDA:₹12, 288Cr up by 154% YoY from ₹4,842Cr
Operating Income:₹23, 592Cr a 7% growth YoY
These metrics firmly position FY25 as a breakthrough year for the company, with gains not only on paper but also on the books.
Revenue Decline: A Red Flag?
While profits soared, revenue from operations in Q4 FY25 dipped to ₹4,108 crore, lower than both the ₹4,685 crore in Q4 FY24 and ₹5,032 crore in Q3 FY25. This top-line contraction may have caused concern among investors, particularly those watching for sustained growth momentum.
Markets often react more sharply to revenue softness, especially when high profits come from exceptional items or one-time gains. This disconnect between rising profits and falling revenue could explain part of the negative investor sentiment.
Stock Market Reaction: Why Shares Fell Despite Good News
Despite the strong results, Reliance Infra shares fell 4.96% to ₹291.00 on Monday, touching a low of ₹287.20, and continuing their downward trajectory from morning trade.
So, why the sell-off?
Here are some possible reasons:
1. Profit Booking: After recent gains, some investors likely cashed out, especially since the stock had seen positive momentum in anticipation of the Q4 results.
2. Revenue Concerns: As discussed, falling revenue in Q4 might have signaled weaker demand or future challenges.
3. Expectation vs. Reality: Sometimes, even excellent results can disappoint if investor expectations were even higher.
4. Valuation Pressures: With major gains already priced in, further upside might require fresh triggers like new contracts or government projects.
Disclaimer:This article is for informational purposes only & should not be considered financial advice. Always consult with a qualified investment advisor before making any investment decisions.