 "Reliance Industries, Reliance, RIL")
Oil-to-telecom conglomerate Reliance Industries Ltd (RIL) on Friday reported a 9.3 per cent year-on-year (Y-o-Y) increase in its consolidated net profit for the quarter ended December 2023. This growth was tempered by weakness in the energy segment, which offset steady profit growth in RIL’s retail and telecom businesses.
Also, Mukesh Ambani, RIL’s chairman and managing director, announced in a press statement that the company’s New Energy Giga complex is slated for commissioning in the second half of 2024.
During the quarter under review, RIL’s net profit rose to Rs 17,265 crore, while its revenue increased 3.9 per cent Y-o-Y to Rs 2.25 trillion. Its reported profit after tax from continuing operations was Rs 19,641 crore, up 10.9 per cent in a year. Sequentially, RIL’s net profit attributable to the company’s owners fell 0.7 per cent, while revenue fell 2.9 per cent.
RIL’s Q3FY24 performance fell short of Street expectations. In a Bloomberg poll, eight analysts estimated revenue at Rs 2.33 trillion, while six analysts estimated an adjusted net income of Rs 18,080 crore.
Revenue growth in the quarter, RIL said, was supported by the continued growth momentum in consumer businesses.
The company’s retail division reported a 23.8 per cent Y-o-Y rise in revenue at Rs 74,373 crore in Q3 FY24. Revenue of Jio Platforms was up 11.3 per cent at Rs 27,697 crore.
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Ebitda (earnings before interest, taxation, depreciation and amortisation) for RIL increased by 16.7 per cent Y-o-Y toRs 44,678 crore, again aided by improved performance from the retail and telecom businesses.
“The strong uptake of the JioBharat phone and JioAirFiber services has resulted in the continued expansion of Jio’s subscriber base, contributing to the stellar growth numbers of the digital services business. The retail segment has also delivered an impressive financial performance with its rapidly expanding physical, as well as digital footprint,” said Ambani in the statement.
PBIDT (profit before interest, depreciation and tax) for Jio Platforms was up 11.5 per cent in a year to Rs 13,955 crore. RIL’s retail business reported a 31.1 per cent Y-o-Y rise in PBIDT at Rs 6,258 crore. Likewise, Jio Platforms net profit was up 11.6 per cent Y-o-Y, while the retail business’ net was up almost 32 per cent.
Depreciation for the retail business increased due to a higher asset base resulting from the addition of new stores and supply chain infrastructure. The business also saw higher finance costs due to increased interest rates and borrowings for business expansion. The segment’s gross revenue from operations for the December quarter stood at Rs 83,063 crore, up 22.8 per cent. The company attributed this growth to its grocery, fashion & lifestyle, and consumer electronics businesses.
Improved performance in the retail and telecom divisions was offset by weakness in RIL’s oil-to-chemicals (O2C) division. The company said Ebitda growth in this division was muted due to planned maintenance and inspection shutdown.
The O2C division’s Ebitda registered a marginal rise of 1 per cent Y-o-Y at Rs 14,064 crore. The company noted that gains from higher gasoline cracks and advantageous feedstock sourcing were partially offset by lower downstream chemical margins and planned maintenance and inspection shutdown. Revenue for the O2C division fell 2.4 per cent to Rs 1.41 trillion, on account of lower price realisation led by a 5.3 per cent Y-o-Y decline in average Brent crude oil prices.
“Oil production cuts by Opec+ countries and wars will keep the market volatile,” said Srikanth Venkatachari, chief financial officer of the company. He further said: “One can remain constructive on refining margins. Domestic demand for downstream chemicals is expected to remain resilient in line with strong economic activities.”
The company’s oil and gas business reported its highest ever quarterly Ebitda, with growth of 49.6 per cent in its profit at Rs 5,804 crore, led by higher gas and condensate production from KG D6 block, the company said.
As part of its new energy business, the company is setting up a 10 gigawatt (GW) solar PV cell and module factory at Jamnagar, which is likely to start operations this year. Overall, RIL had earlier indicated plans to invest $10 billion in its new energy business, which includes plans for five giga factories related to solar energy, storage, green hydrogen, fuel cell and power electronics. Srikanth from RIL said: “The company is on track to commence new energy facilities in phases by the end of this year.”
RIL’s finance costs for the quarter was up 11.3 per cent Y-o-Y at Rs 5,789 crore, which the company said was due to higher loan balances and higher interest rates. Net debt for the company, as of December 2023, was at Rs 1.19 trillion and a consolidated gross debt of Rs 3.11 trillion.
