Reliance Industries Ltd' June quarter results were largely in-line with estimates along with earnings before interest, taxes, depreciation, and amortisation (EBITDA), as well as margins.
The stock has been an underperformer when compared to Nifty50 on YTD basis as well as one-year basis. RIL rose just over 6 percent compared to over 13 percent gain seen in the Nifty50 YTD.
Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited said: “I am happy that our Company has delivered robust growth despite facing a highly challenging operating environment caused by the second wave of the COVID pandemic.”
“The results of the First Quarter of FY2022 clearly demonstrate the resilience of Reliance’s diversified portfolio of businesses that cater to large parts of the consumption basket,” he said.
The stock closed 0.7 percent lower on Friday at Rs 2,105 on the BSE.
We have collated a list of takeaways from RIL Q1 results:
RIL reported a consolidated net profit before exceptional items of Rs 13,806 cr ($1.9 bn), up 66.7 percent on a year-on-year basis, higher than analysts' poll conducted by CNBC-Tv18, that had pegged it at Rs 10,845 crore.
The company had reported a net profit of Rs 8,282 crore in the year-ago period, and Rs 14,198 reported in the previous quarter. The company has delivered robust growth despite facing a highly challenging operating environment caused by the second wave of the COVID pandemic.
Value of Sales:
Value of sales & services rose 57.4 percent on a YoY basis to Rs 1,58,862 cr for the quarter ended June, compared to Rs 1,00,929 cr reported in the year-ago period, the company statement said.
The increase in revenue was primarily on account of the following:
A) Revenue of O2C was driven by higher price realizations across the segment.
B) Revenue of Oil & Gas increased by over 2x, due to incremental production from KG D6 block.
C) Digital Services Segment continued upward trend in Revenues with strong customer traction.
D) Retail Segment revenue was higher on low base with nationwide lockdown in 1Q FY21 and ramp-up in digital commerce channels.
Strategic Partnership With ADNOC
Abu Dhabi National Oil Company (“ADNOC”) and Reliance Industries Limited (“RIL”) have signed an agreement to join a new world-scale chlor-alkali, ethylene dichloride and polyvinyl chloride (PVC) production facility at TA’ZIZ in Ruwais, Abu Dhabi.
The agreement capitalises on growing demand for these critical industrial raw materials and leverages the strengths of ADNOC and RIL as global industrial and energy leaders. The project will be constructed in the TA’ZIZ Industrial Chemicals Zone.
The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the June quarter stood at Rs 27,550 cr, up 27.6 percent on a YoY basis due to robust performances across businesses, led by O2C and Digital Services.
The company reported an EBITDA of Rs 21,585 cr in the year-ago period.
The consolidated net profit of Reliance Jio rose 44.9 percent on a YoY basis to Rs 3,651 cr for the quarter ended June. It reported a net profit of Rs 2,519 cr in the year-ago period.
The average revenue per user (ARPU) during the quarter stood at Rs 138.4 per subscriber per month while EBITDA margin for the June quarter stood at 46.9 percent, increased 440 bps Y-o-Y reflecting operational efficiency.
Customer Gross Additions
Jio reported healthy customer gross addition at 26.7 million (net addition of 14.3 million) in the quarter over the trailing quarter, driven by traction across mobility and homes.
Churn reduced further during the quarter to 0.95% on the back of customer-focused initiatives to minimise COVID-led disruption.
These included complimentary offers for JioPhone users, Emergency Data Loan, WhatsApp recharge option, and Freedom Plans with no daily data limits.
Update on Rights Issue
The total funds raised from the Rights Issue till June 30, 2021 is Rs 26,495.67 crore including an amount of Rs 13,214.62 crore received during the quarter ended June 30, 2021.
RIL clarified that the entire funds raised by the Company through Rights Issue, including amount received during the quarter ended June 30, 2021, has been utilised for the objects stated in the Letter of Offer for Rights Issue of the Company, dated May 15, 2020.
Reliance Retail delivered Gross Revenues for the quarter ended June stood at Rs 38,547 crore ($ 5.2 billion), a growth of 21.9% YoY. Revenue after adjusting for the Petro retailing business that was transferred out, grew at 32% YoY, the company said in the press release.
Store Expansion for Reliance Retail
Store expansion was constrained during the quarter as the business opened 123 stores taking the total count to 12,803. Another 700+ stores in the pipeline will be commissioned as curbs are lifted. The Net Profit for the quarter ended June stood at Rs 962 crore ($ 129 million) higher by 123.2% YoY, said the company statement.
Oil to Chemicals (O2C):
O2C segment revenues for 1Q FY22 increased by 75.2% on a Y-o-Y basis to Rs 103,212 crore ($ 13.9 billion) for the quarter ended June, primarily on account of a sharp increase in product prices on the back of higher Crude prices, said the company statement.
Segment EBITDA for 1Q FY22 improved by 49.8% Y-o-Y to Rs 12,231 crore ($ 1.6 billion) for the quarter ended June primarily on account of the rebound in transportation fuel cracks to 4-6 quarter highs.
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