Reliance Industries has reported net profit, attributable to the owners of the company, at Rs 19,299 crore for the March quarter of the financial year 2022-23, up 19 percent from the year-ago period. The profit beat estimates driven by a strong performance across businesses.
Gross revenue from operations of India's most valued company came in at Rs 2.39 lakh crore, registering a year-on-year rise of 2.8 percent.
The bottom line of the Mukesh Ambani-led company was expected to grow in single digits year-on-year (YoY). Analysts estimated Reliance Industries to post an average net profit of Rs 16,573 crore.
EBITDA increased by 21.8 percent year on year (YoY) to Rs 41,389 crore on account of higher revenue and increase in margins in the digital services segment, the company said in a release. Sourcing benefits and operating efficiencies in the retail segment also helped. Higher transportation fuel cracks and optimised feedstock cost were partially offset by lower downstream chemical margins in Oil-to-Chemicals (O2C) segment.
“O2C segment posted its highest-ever operating profit despite global uncertainties and disruptions in commodity trade flows. Our oil and gas segment also delivered very strong growth and is now poised to contribute nearly 30 percent of India’s domestic gas production,” said Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries.
RIL also witnessed better gas price realization and higher volumes in the oil and gas segment.
“I am happy to note Reliance’s initiatives in digital connectivity and organized retail are driving greater efficiencies in the economy and contributing to India’s emergence as one of the fastest growing economies in the world,” said Ambani.
“This year we have proposed to demerge our financial services arm and list the new entity “Jio Financial Services Ltd. This gives our shareholders an opportunity to participate in an exciting new growth platform from inception.”
Capital expenditure in FY23 was at Rs 1.41 lakh crore, and net debt as of 31st March 2023 stood at Rs 1.10 lakh crore. Venkatachari Srikanth, chief financial officer for the company, said the increase in net debt was due to working capital and translation impact on foreign currency liabilities. He further added that internal accruals would continue to fund the company’s growth plans, as seen over the last two years, where cash profits had covered 98 percent of the capital expenditure. “The emphasis remains on discipline in capital allocation to support growth initiatives. We believe that it will be largely funded through internal accruals,” he said.
Jio Platforms
Jio Platforms' profit for the quarter came in at Rs 4,984 crore, up 15.6 percent. Revenue from operations for the company, which houses Reliance's telecom and streaming businesses, increased 14.4 percent YoY to Rs 25,465 crore.
Revenue from operations increased primarily driven by a sustained increase in subscriber base for the connectivity business while strong EBITDA growth was led by higher revenue and increase in margins.
Average revenue per user (ARPU), an important metric to measure the performance of telecom companies, also improved 6.7 percent YoY to Rs 178.8 per user per month. Quarter on quarter it improved by 60 paise per user.
"Jio has taken formidable strides in pioneering 5G rollout across the country with unmatched speed of execution," said Akash M Ambani, chairman, Reliance Jio Infocomm Limited.
This has led to a significant improvement in customer experience, reflected in the higher engagement levels among Jio users. "Jio remains committed to build a robust digital society with tailormade technology platforms which will drive sustained growth in earning and value for all stakeholders," he added.
Also Read: Reliance Jio FY23 EBITDA up a solid 24.2% on strong revenue growth of 17.9%
Retail Business
Reliance Retail delivered a robust performance with another quarter of strong revenue growth and profit performance. The bottom line grew by 12.9 percent YoY to Rs 2,415 crore while revenue from operations stood at Rs 61,559 crore, up 21.1 percent YoY. Store footfalls was at 219 million, the highest ever, up from 201 million in Q3FY23.
RIL said the business continued to invest in strengthening its supply chain capabilities by expanding over 1.7 million sq. ft. of warehouse space. Digital Commerce and New Commerce contributed to 17 percent of revenue.
"In last 10 years, we have allocated capital to consumer-centric businesses which has transformed the earning mix and positioned us as a consumer and tech company," Srikanth said.
The company said focus will remain on expanding distribution reach across geographies for this segment.
Also Read: Reliance Retail Q4: Net profit up 13% at Rs 2,415 crore on highest ever footfalls
O2C
Revenue for the O2C business fell by 11.8 percent YoY to Rs 1,28,633 crore. Exports dropped 0.4 percent to Rs 78,851 crore. EBITDA, meanwhile, improved 14.4 percent to Rs 16,293 crore.
EBITDA margin was at 12.7 percent, an increase of 290 bps YoY led by strength in transportation fuel cracks, optimized feedstock cost and advantageous ethane cracking economics. This was partially offset by lower polyester chain margins. Special additional excise duty on transportation fuels adversely impacted earnings by Rs 711 crore. The full year impact of special additional excise duty on transportation fuels on earnings was at Rs 6,648 crore.
Commenting on the O2C business' full-year performance, Srikanth said the vertical had benefited strong global oil demand. “We had a better margin capture and also superior product placement. Higher fuel cracks offset weak downstream margins,” he said.
The O2C business includes refining, petrochemicals, fuel retailing through Reliance BP Mobility Limited, aviation fuel and bulk wholesale marketing.
Oil & Gas
Oil & Gas revenue more than doubled to Rs 4,556 crore as compared to Q4FY22, mainly on account of higher price realisation and 13 percent increase in KGD6 gas production. The average price realised for KGD6 was at $11.39 /MMBTU in the March quarter, against $6.13 / MMBTU a year ago. MMBTU is Metric Million British Thermal Unit. KGD6 gas production likely to increase to 30 mmscmd in FY24 with commissioning of MJ field, where testing and commissioning is underway.
EBITDA increased sharply to Rs 3,801 crore, which was up almost 2.5x on YoY basis. EBITDA margin was at 83.4 percent for Q4FY23 up by about 60 bps as compared to Q4FY22.
The company expects the gas market environment in India to remain positive in the medium term, while global gas price are likely to remain volatile with demand uncertainties and higher EU storage.
In the current financial quarter, Reliance Industries said it has sold the entire volume of 6 MMSCMD in an e-auction held on April 12 and the Gas sale purchase agreement (GSPA) is under execution with successful bidders.
Media
RIL's media business reported a loss of 35 crore for the quarter. Revenue fell 8.5 percent to Rs 1,484 crore.
TV News segment grew, driven by the growth in advertising revenue. Excluding movie production segment which has project-based volatility, revenue was marginally up with growth across all verticals, RIL said.
TV News reported a sharp QoQ improvement in EBITDA and margins. Consolidated EBITDA was down primarily due to Viacom18’s investments in new initiatives (Sports and Digital verticals had an impact of Rs 170 crore on EBITDA) and a lag in recovery of ad revenues.
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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