Reliance Industries reports 7% YoY rise in Q3 net profit

The profit beat the Street estimates of Rs 18,337 crore, while revenue was also higher than the poll expectations of Rs 2.39 lakh crore.

The oil-to-telecom conglomerate's operating profit, measured as EBITDA, surged nearly 8% to Rs 48,003 crore in the reporting third quarter. Margins expanded 10 basis points to 18%.

Depreciation during the quarter increased 2% YoY to Rs 13,181 crore, while finance costs were up 7% YoY, mainly due to higher debt balance. However, net debt remained largely flat.

"It gives me great pleasure to see Reliance grow exponentially over the years and set new benchmarks that demonstrate the inherent strength and resilience we have across all our businesses. The delivery of record EBITDA and PAT at a consolidated level for this quarter is a testament to this," said Mukesh Ambani, Chairman and MD, Reliance Industries.

The strong growth during the quarter was led by healthy show from all the key businesses of Jio, Retail and particularly the O2C (oil-to-chemicals, where refining margins recovered sequentially.

"The O2C business showcased its innate resilience, registering growth even in this prolonged period of volatility in the global energy markets," Ambani said.

Jio Platforms

Jio Platforms, the company's digital arm, registered 26% YoY growth in its net profit at Rs 6,861 crore, while revenues improved 19% YoY to Rs 38,750 crore.

The strong operating revenue growth was due to partial impact of tariff hike, ramp up in pace of home connect and accelerating non-connectivity digital services businesses.

EBITDA for the business was up nearly 19% YoY in the third quarter to Rs 16,585 crore, but margins declined 30 bps to 50.1%.

ARPU (Average revenue per user) increased further to Rs 203.3, but was slightly below analyst expectations of Rs 204, with sustained impact of tariff hike and better subscriber mix.

The company said residual impact of tariff hike undertaken last year will still play out in the coming quarters.

"The robust growth in digital services business was led by sustained subscriber addition and consistent improvement in customer engagement metrics. This was well supported by a favourable subscriber mix, with an increasing number of users upgrading to 5G networks," Ambani said.

Jio clocked industry leading customer engagement with per capita data consumption of 32.3 GB per month, and total data traffic growth of 22%. Meanwhile, customer addition has rebounded to pre-tariff-hike levels in the exit month after transient SIM consolidation.

The net subscriber addition in third quarter was 3.3 million and monthly churn moderated to 2%.

For JioAirFiber, more than 70% of incremental additions are coming from previously underserved cities and towns. Overall pace of home connect for Jio has continued to accelerate with total installed base of 17 million.

O2C business

After sustained weakness over the last few quarters, the O2C business showed healthy operating performance with an EBITDA growth of 2% to Rs 14,402 crore. The revenues for the segment were also up 6% YoY to Rs 1.49 lakh crore.

The revenue growth was on the back of higher production meant for sale as compared to the prior year period which had planned maintenance and inspection shutdown of major units. The growth was also supported by robust domestic demand and product placement.

"Domestic fuel retailing volume increased significantly with 43.7% growth in MS and 22.8% growth in HSD," RIL said in a statement.

Global refinery crude throughput was higher by 0.75 mb/d YoY at 81.75 mb/d in the third quarter. However, global utilization rate was 29 bps lower YoY at 78.7% due to net capacity addition of 1.3 mb/d.

Transportation fuels cracks remained healthy during the quarter, though lower than previous year elevated levels. RIL said stronger demand in Asia ex-China region helped soften the impact of China’s weak demand growth.

Reliance Retail

Reliance Retail, the consumer facing business of RIL, registered a revenue growth of 9% YoY to Rs 90,333 crore in the third quarter. The sequential growth was even stronger at 18%, driven by several productivity improvement initiatives and increased customer engagement during festive period through new product launches and promotions.

EBITDA from operations for the quarter rose 10% YoY to Rs 6,632 crore and EBITDA margins improved 20 bps YoY to Rs 8.3%. PAT too jumped 10% YoY to Rs 3,458 crore.

The business opened 779 new stores during the quarter and the total store count now stands at 19,102 with area under operation at 77.4 million sq ft. The quarter recorded footfalls of over 296 million, a growth of 5% YoY.

The registered customer base grew to 338 million and the focus on scaling up digital commerce and new commerce continued with these channels contributing to 18% of total revenue.

B2C grocery segment rose 37% YoY, reflecting rapid growth at a significantly higher scale relative to other offline and online grocery players.

"Retail segment delivered a strong performance, with noteworthy contribution from all formats. The business ably capitalized on the pick-up in consumption amid festive demand during the quarter," Ambani said.

Meanwhile, Isha Ambani, ED of Reliance Retail said the focus on offering wide range of products at an attractive price value proposition continues to draw customers to its stores and digital platforms.

Oil and Gas

The Oil and Gas third quarter revenue came in lower by 5% at Rs 6,370 crore due to a lower volume of gas and condensate in KGD6, and lower realisation for CBM Gas and condensate. This was partly offset by increase in CBM gas volumes and marginal increase in the KGD6 gas price.

EBITDA for the business also fell 4% YoY to Rs 5565 crore in the reporting quarter.

The average price realized for KGD6 gas was $9.74 per MMBTU in the third quarter. The average price realised for CBM gas was $10.58 per MMBTU in Q3.

On Thursday, RIL shares closed nearly 2% higher at Rs 1,275 on NSE.