Reliance Industries Ltd's fiscal second-quarter net profit rose 9.4 percent from the preceding three months to Rs 16,563 crore, beating analysts' expectations, driven by robust growth in its telecom and retail businesses.
Revenue from operations for India’s most valuable company stood at Rs 2.35 lakh crore in the quarter ended September 30, compared with Rs 2.36 lakh crore a quarter ago.
A Moneycontrol poll of seven brokerages had estimated Reliance Industries fiscal second-quarter revenue to fall marginally to Rs 2.31 lakh crore from the preceding three months. Net profit was expected to fall 12 percent to Rs 15,354 crore.
"Our performance reflects robust growth in Digital Services and Upstream business. This helped partially offset weak contribution from O2C business which was impacted by unfavourable global demand-supply dynamics," said chairman and managing director Mukesh Ambani.
RIL said that the telecom unit Jio's monthly ARPU (average revenue per user) grew by a strong 7.4 percent year-on-year to Rs 195.1. The company said that the full impact of the tariff hike will flow through in the next 2-3 quarters. Further, Jio strengthened its leadership in 5G with 148 million subscribers upgrading to the faster service. This segment contributes 34 percent of wireless data traffic for Reliance Jio.
Jio Platforms, which houses RIL’s digital services businesses, reported a record quarterly profit of Rs 6,536 crore, the company said. "Growth in Digital Services was led by increased ARPU and improving customer engagement metrics reflecting the strong value proposition of our services," said Ambani.
Reliance Retail Ventures reported a profit after tax of Rs 2,935 crore for the September quarter, up almost 20 percent from a quarter ago. The retail unit's revenue from operations rose to Rs 66,502 crore from Rs 66,260 crore in the preceding three months.
"The retail segment continues to increase its consumer touchpoints and product offerings across physical and digital channels. The unique omni-channel retail model enables the business to service a wide range of requirements of a vast, heterogenous customer base," said Ambani in the statement.
Reliance Industries reported robust performance across its four key verticals - Oil-to-chemicals, Jio Platforms, Retail and Oil & Gas.
Oil-to-chemicals
Revenue for the company’s oil-to-chemicals (02C) business for the quarter grew by 5.1 percent to Rs 1.55 lakh crore, from Rs 1.47 lakh crore in the year ago period.
Ebitda for the September quarter stood at Rs 12,413 crore, compared to an Ebitda of Rs 16,277 crore in the same period last year. Unfavourable demand-supply balance led to sharp 50% decline in transportation fuel cracks and continued weakness in downstream chemical deltas, the company said.
“The cracks were very elevated last year compared to the quarter. Oil demand is also weaker and product supplies from Africa and other areas have increased. Significant volatility has been seen on both crude prices and product prices,” said Venkatachari Srikanth, CFO, Reliance Industries Limited in a post earnings presentation.
He added that in the September quarter both polymer and polyester demand was down.
“Overall oil demand is expected to be less than 1 million bpd (barrels per day) in 2024 and 2025, compared to growth of 2.1 million bpd in 2023,” said Srikanth.
However, he expressed optimism that India downstream demand will be boosted by the upcoming festival season. He also expects improvement in downstream margins of O2C segment from stimulus measures in China.
The O2C business includes refining, petrochemicals, fuel retailing through Reliance BP Mobility Ltd, aviation fuel sales and bulk wholesale marketing.
The company does not report its gross refining margins (GRMs) separately but has traditionally outperformed the benchmark Singapore GRMs.
Oil & Gas business
The oil and gas business reported a record quarterly EBITDA of Rs 5,290 crore, a 11 percent increase from a year earlier.
The oil and gas segment’s revenue came in at Rs 6,222 crore compared to Rs 6620 crore in the previous year, mainly on account of lower price realisation, partly offset by increase in gas and condensate volumes in KGD6 and CBM field.
The average price realised for KG D6 gas was $ 9.55 per MMBTU (million metric British thermal unit) in the September quarter compared to $ 10.46 per MMBTU in Q2 FY24. The average price realised for CBM (coal bed methane) gas was $ 11.4 per MMBTU in the quarter compared to $ 13.72 per MMBTU in the year-ago period.
Jio Platforms
Jio Platforms registered a record profit of Rs 6,536 crore in the second quarter, an increase of 23.4 percent, driven by strong subscriber additions and tariff hikes.
The telecom and streaming business segment’s revenue from operations rose 18 percent to Rs 31,709 crore in the September quarter.
The average revenue per user (ARPU), an important metric to measure the performance of telecom companies, improved strongly by 7.4 percent to Rs 195.1 per user per month from a year ago.
Jio’s subscriber base was approximately 479 million as of September 30, up 4.2 percent.
Akash M Ambani, Chairman of Reliance Jio Infocomm, said, “Right from inception, Jio has focused on deep tech innovation to create customer and shareholder value. The ongoing transformation created by Jio True5G and JioAirFiber in India’s digital landscape is a testament to this approach. AI is creating the next runway for this transformation, and Jio is committed to developing the world’s best AI ecosystem in India, for all Indians.”
The company added that JioAirFiber’s rapid uptake has significantly accelerated the pace of home connections, with approximately 2.8 million homes connected by JioAirFiber as of September 24. Jio’s pace of home connections is the fastest of its kind globally, the company said.
“We continue to make good progress on the home side. We are the fastest growing Fixed Wireless Access provider globally with the JioAir Fiber offering. We reached 2.8 million subscribers..that’s almost doubling our subscriber base with Air Fiber in this quarter and run rate has ramped up significantly,” Jio Platforms’ Senior Vice President Anshuman Thakur said in the post-earning presentation.
“We continue to build market leadership with 5G service with 148 million subscribers switching to 5G contributing 24% of wireless data tariff. We are happy with the uptake of service and nature of delivery itself. We expect to keep improving on this…we expect data traffic to keep increasing,” added Thakur.
On ARPU growth, Thakur commented that ARPU is steadily growing. “There is the impact of tariff increase but in addition customer upgrading and subscribers moving to higher plans as consumption improves and some of additional services that we have been able to sell to customers are also contributing to the increase in the APRU,” he said.
Retail and Media
RIL’s retail arm, Reliance Retail, posted a net profit of Rs 2,935 crore in the quarter, an increase of 5.2 percent year-over-year and an increase of 20 percent over the preceding quarter.
EBITDA increased to Rs 5,850 crore YoY, while EBITDA margin increased 30 basis points to 8.8 percent.
The company opened 464 new stores during the quarter, bringing the total number of stores to 18,946 covering an area under operation at 79.4 million sq. The quarter saw a total footfall of 297 million across formats, a growth of 14 percent y-o-y.
The focus on scaling up Digital Commerce and New Commerce continued with these channels contributing to 17% of total revenue, the company said.
"Reliance Retail continues to make investments in technology and infrastructure to build a strong foundation for future growth and maintain market leadership. We continue to strengthen our customer proposition with innovative products that spans everyday essentials to premium offerings. By continuously enhancing our assortment and innovating across categories, we are creating a shopping experience that meets the evolving needs of our customers and reinforces our leadership in the retail space,” said Isha M. Ambani, Executive Director, Reliance Retail Ventures Limited.
Commenting on consumer demand in the ongoing festive season, Dinesh Taluja , CFO and Corporate Development, Reliance Retail said that with festival season now starting, growth is picking up and the retailer is optimistic about the next couple of quarters.
“We are seeing some very strong growth in the first two weeks of October, as the festival season has started kicking in. We expect this momentum to continue going on to Diwali, and we are also quite optimistic for this quarter. This year, we touched a new high. We registered the highest-ever single-day sales on independence day,” said Taluja.
Taluja added that Reliance Retail is seeing strong traction in its premium formats, while Jiomart has scaled up hyper-local deliveries through an extensive network of stores.
The news portfolio of Reliance’s media business saw its revenue grow 6 percent driven by growth in digital segment advertising revenue, across all brands.
Overall, the media business reported a revenue from operations of Rs 1,825 crore in the September quarter.
Disclosure: Moneycontrol is part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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