Reliance Industries reported a 6 percent year-on-year drop in net profit and 4.7 percent fall in revenue for the quarter ended June 2023 owing to a muted performance in its oil-to-chemical business (O2C), even as the retail and telecom businesses continued their rapid growth. The key numbers failed to meet analyst expectations.
Here are key highlights of the quarterly earnings:
Revenue & Profits
- Consolidated net profit attributable to shareholders stood at Rs 16,011 crore in the June 2023 quarter, down 11 percent YoY.
- Consolidated total revenue in the June quarter declined to Rs 2.31 lakh crore, down 4.7 percent YoY.
- O2C earnings were lower due to a sharp fall in fuel cracks from exceptionally high levels in 1Q FY23.
- Higher subscriber base and customer engagement led revenue and profitability growth for digital services. Retail earnings reflect expanded footprint and improved profitability with operating leverage.
- Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increased 5.1 percent YoY to Rs 41,982 crore.
Expenses
- Overall expenses during April-June 2023 fell to Rs 1.90 lakh crore versus Rs 1.98 lakh crore.
- Depreciation increased by 31.7 percent YoY to Rs 11,775 crore due to expanded asset base across all the businesses.
- Finance costs increased by 46 percent YoY to Rs 5,837 crore ($ 711 million), primarily due to higher interest rates and loan balances.
Capex rises
- Capital expenditure for the quarter ended June 30, 2023, was Rs 39,645 crore, up from Rs 31,442 crore YoY.
- The company’s expansion plan includes building four giga factories in Jamnagar, Gujarat.
Jio Financial demerger on track
- The demerger of Jio Financial Services Ltd from RIL is on track with key approvals in place, said Mukesh D. Ambani, Chairman and Managing Director, RIL.
Jio Platforms
- Jio Platforms, which houses Reliance’s telecom and digital businesses, saw 12.5 percent growth in profit and 11.3 percent in revenue.
- Operating revenue growth was driven by subscriber gains in connectivity business and scale-up of digital services.
- EBITDA grew 14.8 percent led by revenue increase with increased margins.
- Jio said it has deployed over 115,000 sites with 690,000 5G cells covering more than 90 percent census towns and is leading in terms of both network availability and customer experiences.
Reliance Retail
- Reliance’s retail business reported a net profit growth of 18.8 percent and revenue growth of 20.5 percent.
- EBITDA margin from operations on net sales was at 7.9 percent, up 30 bps YoY driven by efficiencies, the company said.
- The business opened 555 new stores during the quarter. Now it has a total 18,446 stores.
- The quarter also recorded the highest ever footfalls at 249 million across formats.
O2C: Challenging quarter
- O2C demand was impacted by destocking on recessionary fears and high interest rates, as well as slower than expected ramp-up in China markets.
- The company said YoY comparisons are skewed due to historic high fuel cracks in 1Q FY23, with dislocation in energy markets.
- EBITDA for 1Q FY24 reduced by 23.2 percent YoY to Rs 15,271 crore led by fall in transportation fuel cracks and lower downstream chemical margins.
- Revenues declined 17.7 percent and exports 28.2 percent YoY
Exploration business
- RIL’s oil and gas exploration business saw revenue rise 27.8 percent during the quarter on account of higher gas price realization and increase in KGD6 volumes with start-up of oil and condensate production from MJ fields.
- EBITDA increased to Rs 4,015 crore, up by 46.7 percent YoY.
- EBITDA margin was at 86.7 percent, up by 120 bps as compared to Q1FY23.
Cash in hand
- RIL said cash on its books as of 30 June 2023 was Rs 1,92,064 crore, lower from Rs 1,88,200 crore at the end of the March quarter. This includes the impact of demerger of Jio Financial Services.
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