RIL Q1 takeaways: Few more records created, ARPU keeps climbing up, retail biz shakes off Covid shackles, and more

Reliance Industries Limited (RIL) continued to report bigger profit and revenue numbers for another quarter, led by stellar performances in the oil-to-chemical and retail businesses.

While its oil business grew, thanks to higher international prices and ramp- up in exports, its retail business topped the pre-covid footfall numbers, helped by expanding network of stores.

RIL reported a 54.5 percent year-on-year (YoY) growth in consolidated revenue from operations to Rs 2.23 lakh crore. Operating profits rose 45.8 percent YoY to a record high of Rs 40,179 crore. Profits climbed 46.3 percent YoY to Rs 17,955 crore.

Below are 10 key takeaways from RIL Q1 numbers:

RIL’s oil-to-chemical (O2C) business delivered its best-ever quarterly performance with all-time-high revenue and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

Segment revenues for Q1 increased by 56.7 percent YoY to Rs 1.62 lakh crore, primarily on account of higher crude oil and product prices. Segment EBITDA for 1Q FY23 improved by 62.6 percent YoY to Rs 19,888 crore primarily on account of sharp rise in transportation fuel cracks and better volumes.

RIL said it maintained high O2C utilisation levels across sites and units. Total throughput (including refinery) was 19.7 million metric tonnes (MMT), marginally higher than 1Q FY22.

RIL’s oil & gas segment revenues for Q1 increased by 183 percent YoY to Rs 3,625 crore. Segment EBITDA sharply increased to Rs 2,737 crore. This was primarily due to improved gas price realization in KG D6 and CBM, and higher production in KG D6.

The company said average gas price realized for KGD6 was at $9.72/MMBTU in Q1FY23 versus $3.62/MMBTU in Q1FY22.

In the first quarter without any operating disruptions since the onset of Covid-19, footfalls in its stores were 19 percent above pre-Covid levels as consumers returned to stores. The total footfall during the quarter was at 17.5 crore for the quarter. The increased footfalls and digital visits have translated into 220 million transactions in Q1, a growth of more than 60 percent over pre-Covid levels, RIL said.

The positive impact was also visible in the registered customer base, which crossed a milestone of 200 million. The customer base stood at 208 million at the end of the quarter, up 29 percent YoY.

Reliance Retail said it continued to open new stores at a rapid pace. With 792 store openings in the quarter, the spread of 15,866 stores with an area of 45.5 million sq ft covers all corners of the country.

The company also continued to bolster its supply chain capabilities with addition of 79 warehousing and fulfillment locations measuring 3.3 million sq ft of space added during the quarter.

The company also generated 17,000 new jobs this quarter, taking the total headcount to 3.79 lakh.

Reliance Retail said its digital and new commerce grew more than twice over last year and contributed about 19 percent of gross revenue. The digital commerce platforms continue to grow from strength to strength with daily orders up 64 percent YoY, Reliance said.

The arm continues to onboard new merchants and order in its platforms. Its AJIO platform added 660 new brands as it continued to strengthen its product offering. It also introduced 14 new own brands during the quarter increasing the share of own brands to 30 percent.

Reliance Jio said its average revenue per user (ARPU) – an important metric for telecom companies – climbed to Rs 175.7 in the quarter ending June, against Rs 167.60 in the previous quarter, a jump of 4.8 percent QoQ. Year-on-year the metric climbed 27 percent.

The company said its revenue, and in turn ARPU, increased “driven by residual impact of tariff hike and acceleration in fiber to the home (FTTH)” service.

EBITDA margin of the telecom business also increased 176 bps YoY to 48.7 percent due to ARPU increase in connectivity business partly offset by inflationary pressure on operating costs.

The company said total data traffic for Jio was 25.9 billion GB during the quarter, rising 27.2 percent YoY. Total voice traffic was 1.25 trillion minutes during the quarter, a rise of 17.2 percent YoY. This was on the total customer base of 41.99 crore as of June-end.

Thus, average data and voice consumption per user per month increased to 20.8 GB and 1,001 minutes, respectively.

The company said its media business saw a drop in some numbers due to various reasons. Consolidated revenue rose 10.4 percent YoY to Rs 1,340 crore but high inflation created a challenging environment for advertising revenue while subscription revenue continued to be stymied by the delay in new tariff order (NTO 2.0) implementation.

The company said operating costs jumped 26 percent thanks to increased investments in entertainment content and marketing. Consolidated EBITDA was Rs 46 crore, down 75.5 percent on a Y-o-Y basis. Operating margin was at 3.4 percent, down from 15.5 percent YoY.

RIL said the company was forging alliances to realise its goal for the new energy business, which includes setting up four giga factories in Jamnagar to produce soal modules, batteries, hydrogen and conversion of hydrogen into energy.

“Reliance is committed to invest in India’s energy security. Our New Energy business is forging partnerships with technology leaders in solar, energy storage solutions and the hydrogen eco-system. These partnerships will help us realize the vision of clean, green and affordable energy solutions for all Indians,” the company said.

On a consolidated basis, RIL said its outstanding debt as on June 30, 2022 was Rs 2,63,382 crore ($33.4 billion). Cash and cash equivalents stood at Rs 2,05,727 crore ($26.1 billion).

RIL retained its domestic credit ratings of “CRISIL AAA/Stable” from CRISIL and “IND AAA/Stable” from India Ratings and an investment grade rating for its international debt from Moody’s as “Baa2” and “BBB+” from S&P.

The company said its capital expenditure (including exchange rate difference) for the quarter was Rs 31,442 crore ($4 billion).