Reliance Industries Limited (RIL) on January 20 said its revenue from operations for the quarter ended December 2022 (Q3FY23) came in at Rs 220,592 crore, up 15.32 percent against Rs 191,271 crore reported a year ago.
Its consolidated net profit for the third quarter of FY23 stood at Rs 17,806 crore, down 13.30 percent year-on-year (YoY). Profit after tax, excluding the impact of an exceptional item that boosted the bottomline in 3QFY22, marginally improved by 0.6 percent year-on-year. RIL had booked sale from its divestment of shale gas assets that resulted in an exceptional item of Rs 2,836 crore in the third quarter a year ago.
Net profit attributable to owners of the company, excluding non-controlling interest was Rs 15,792 crore, which was 15 percent lower than a year ago.
Company officials said higher finance costs were due to interest rate hikes by central banks and higher loan balances.
According to an analyst poll conducted by Moneycontrol, its net profit was expected to grow 4.4 percent to Rs 16,366 crore from a year earlier. Revenue was expected to rise 21 percent YoY to Rs 2.23 lakh crore.
The company said its EBITDA increased by 13.5 percent YoY to Rs 38,460 crore ($4.6 billion), on account of strong growth in the subscriber base for its digital business, growth across consumption baskets, improvement in middle distillate cracks and higher gas price realisation with an increase in ceiling price, and marginally higher volumes in the Oil & Gas segment.
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"All segments contributed to the robust growth in consolidated EBITDA on a YoY basis," said Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries. "Our teams across businesses have done an excellent job in delivering strong operating performance through a challenging environment.”
Jio Platforms, which is the telecom and digital services subsidiary of the company, reported 28.6 percent YoY growth in net profits at Rs 4,881 crore. Its revenue from operations was at 24,892 crore, up 20.9 percent YoY. EBITDA increased 25.1 percent YoY to 12,519 crore.
Revenue growth was driven by a steady increase in both the subscriber base and average revenue per user (ARPU) for the connectivity business. EBITDA increase led by revenue growth and margin improvement, the company said, adding that EBITDA margin increased by 170 basis points due to increased ARPU and benefit from lower spectrum usage charges.
Net subscriber addition was 5.3 million as gross adds remained strong at 34.2 million in 3Q FY23, RIL said. ARPU increased 17.5 percent YoY to Rs 178.20 per subscriber per month due to a better subscriber mix. Sequentially, it rose 0.56 percent.
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"Jio delivered record revenues and EBITDA driven by strong momentum in customer growth and data consumption," said Ambani. "This quarter we launched True 5G services. It is now available in 134 cities and towns in India, enhancing the customer experience while enabling next-generation services."
RIL's retail business reported net profit growth of 6.2 percent YoY to Rs 2,400 crore. Revenue from operations rose 18.6 percent YoY to Rs 60,096 crore. EBITDA increased 24.9 percent YoY to Rs 4,773 crore.
The company said the revenue increase was led by well-rounded growth across all baskets and channels. EBITDA from operations increased with a 70 basis point margin improvement driven by a favourable mix, operating leverage and efficiencies.
During the quarter, Reliance Retail increased its store count to 17,225. The quarter also recorded the highest-ever footfalls at 201 million across formats and geographies.
The company said Digital Commerce and New Commerce businesses continue to demonstrate the strength of their business model and grew 38 percent YoY and contributed to 18 percent of the revenue.
“Our performance during the quarter demonstrates the underlying strengths and efficiencies of our business model that enable us to serve our customers with excellence at all times," said Isha M Ambani, Executive Director, Reliance Retail Ventures. "We remain steadfast in offering the best shopping experience across all our stores and digital platforms to deepen our bond with our customers and vendor partners.”
Segmental revenue for the oil to chemicals (O2C) business rose 10 percent YoY to Rs 1,44,630 crore. EBITDA increased 2.9 percent to Rs 13,926 crore.
Commenting on the energy vertical, group Joint CFO V Srikanth said, “Energy businesses accounted for 70% of incremental growth on a quarter-on-quarter basis.” He said that the oil and gas segment maintained stable production and higher realisation led to higher contribution.”
Revenues increased on account of higher price realisation as crude oil prices went up by 11 percent year-on-year, said the company in a press release. Revenue growth was constrained by lower throughput with planned Maintenance & Inspection activity turnaround during the quarter. Srikanth added, “Volatile price environment and weak demand from China impacted downstream margin.”
Growth in EBITDA was supported by strength in middle distillate cracks. This was, however, partially offset by weak margins across polymer, polyester chain and light distillates products. Continued SAED (special additional excise duty) on transportation fuels also impacted earnings by Rs 1,898 crore, RIL added.
The company sees Middle Distillate cracks to remain firm on lower inventories, seasonal demand, and the impending loss of Russian oil products. Meanwhile, petrochemical feedstock price volatility will likely continue amidst uncertain geopolitical situations and recessionary trends in developed economies, it said.
Srikanth attributed the quarter-on-quarter 12% decline in crude oil prices to demand and recession fears in Europe, the USA. However, the official added, India’s demand for fuels and downstream products remained strong even as global demand declined.
RIL management said that the global oil demand is estimated to grow by 1.9 million barrels per day in 2023, led by the US, China and India. Srikanth said that some of the new capacity that will be commissioned in the second half of 2023r would result in an effective net global refining capacity addition of around 1 million barrels per day, so while their margin will get some support, the upside would be limited.
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Oil & Gas
Revenue for the oil and gas segment, which refers to RIL's exploration and production business, increased 74.8 percent YoY to Rs 4,474 crore led by improved gas price realisation and higher production.
The company’s outlook for the gas market remains positive. “Gas price realization is expected to remain high in near-time even though some cool-off has happened,” said Sanjay Roy, Senior Vice President –exploration and production at RIL.
The average gas price realised for KGD6 was at $11.3/MMBTU in 3QFY23 vs $6.1/MMBTU in 3Q FY22, with the raising of gas price ceiling to $12.46/MMBtu by the Government of India.
EBITDA increased 90.9 percent YoY to Rs 3,880 crore. EBITDA margin was at 86.7 percent.
RIL said geopolitical uncertainty and constrained supply are likely to keep gas prices firm in the near term while incremental production and higher prices will support EBITDA growth in the near term.
Net profit for its media business was at Rs 9 crore, down 97.1 percent YoY. Revenue from operations, meanwhile, increased 11.6 percent to Rs 1,850 crore primarily driven by the movies and sports business amidst a challenging advertising environment.
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The continued softness in the macroeconomic environment dampened the advertising demand and ad revenue of all our segments was down on a YoY basis, RIL said. EBITDA declined sharply on YoY basis with the drop in advertising revenue directly impacting margins as investments in content continued with a view to consolidating operating metrics.
The company said inflation has been showing signs of cooling off, but the revival of consumer demand remains crucial for growth in the media business. Our strong positions across verticals put us in a pole position to grow once the macroeconomic environment normalises, it added.
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