RIL Q2 Earnings: Consolidated Net Profit Flat At Rs 13,656 Crore

The oil-to-telecom conglomerate’s revenues surged 33.7 per cent to Rs 2.32 lakh crore due to strong performance of the oil-to-chemical, telecom and retail operations in the quarter

RIL's consolidated operating profit in the quarter, including the impact of special additional excise duty imposed by the government in July, surged 14.5 per cent on-year to Rs 34,663 crore.

Source : Getty

Mukesh Ambani-led Reliance Industries on Friday reported a consolidated net profit of Rs 13,656 crore for the quarter ended September (Q2) as against Rs 13,680 crore in the year-ago period, according to the exchange filings.

The oil-to-telecom conglomerate’s revenues surged 33.7 per cent to Rs 2.32 lakh crore due to strong performance of the oil-to-chemical, telecom and retail operations in the quarter.

Analysts had expected a 12 percent growth in profit to Rs 15,263 crore and a 34 percent rise in sales to Rs 2.25 lakh crore.

The company's consolidated operating profit in the quarter, including the impact of special additional excise duty imposed by the government in July, surged 14.5 per cent on-year to Rs 34,663 crore, RIL said.

Ambani, chairman and managing director, RIL, said: “I am pleased with the record performance of our consumer businesses which continue to scale new milestones every quarter. We saw consistent net subscriber additions and higher engagement in Digital Services segment. Jio has announced beta trial for its industry-leading Standalone 5G services and is making rapid progress for an ambitious and the fastest ever roll out of True 5G on pan-Indian basis. Our Retail business delivered record performance with strong revival in footfalls, store additions and digital integration. Reliance Retail continues to provide a compelling proposition of great shopping experience and superior value across consumption baskets and price points. Performance of our O2C business reflect subdued demand and weak margin environment across downstream chemical products. Transportation fuel margins were better than last year but significantly lower sequentially. Segment performance was also impacted by the introduction of special additional excise duties during the quarter to ensure stable supply and lower volatility in the domestic market.”

He said, “Our domestic Oil & Gas business continued to deliver robust performance maintaining production at 19 MMSCMD levels in the KG D6 block, significantly enhancing energy security for the country. We are confident of commissioning MJ Fields by year end."

Meanwhile, Reliance Jio Infocomm on Friday logged a net profit of 28 per cent year-on-year (YoY) rise for the September quarter at Rs 4,518 crore. The telco’s net profit stood at Rs 3528 crore in the same period previous fiscal year, the company said in a regulatory filing. The revenue from operations jumped 20.2 per cent to Rs 22,521 crore for the just ended quarter, from Rs 18,735 crore in the year-ago period.

Jio's net subscriber addition was healthy at 7.7 million as gross adds remained strong at 32.7 million in 2Q FY23, while ARPU improved further to Rs 177.2 due to better seasonality and improving subscriber mix.

In the retail segment, the company had a record quarter helped by the full re-opening of the domestic economy post Covid-19 related curbs seen through large parts of 2021-22. The segment's revenues jumped 44.5 percent on-year to Rs 57,694 crore in the reported quarter aided strong new strore addition and footfalls. RIL said that it received over 180 million footfalls in the September quarter, which was a 23 percent jump over pre-Covid-levels.

During the quarter, the company opened 795 new stores to take the total store count to 16,617. "The quarter was marked by an operating environment at par with pre-Covid levels as the impact of pandemic waned," RIL added.

Key Highlights:

2QFY23

* Resilient quarterly consolidated performance
* Revenue at ₹ 253,497 crore, up 32.4% with strong traction in consumer businesses and higher oil prices
* EBITDA at ₹ 34,663 crore up 14.5%
* Digital Services EBITDA at ₹ 12,291 crore, up 28.5%
* Retail EBITDA at ₹ 4,414 crore, up 51%
* Consumer businesses contributed to 50% of consolidated segment EBITDA
* Oil & Gas EBITDA at ₹ 3,171 crore, up 3x YoY
* Net Profit at ₹ 15,512 crore – flat YoY with volatility in O2C markets and SAED related costs
* Net Profit would have been up 20% YoY excluding the impact of Special Additional Excise Duty related costs
* O2C segment EBITDA impacted by weak downstream chemical margins and introduction of SAED, partially offset by firm transportation fuel margin
* Demand for downstream petrochemicals impacted by volatile prices – domestic polymer/polyester demand up 1-2%
* Volatile energy markets - Crude prices varied between $85-$125/bbl; LNG prices varied between $35-$71/mmbtu
* 1H FY23 capex funded by cash profits. Net debt at ₹ 93,253 crore (v/s ₹ 34,815 crore as at March’22) increased due to
* Higher working capital due to dislocation in energy markets
* Translation impact on Foreign Currency liabilities
* First installment of 5G spectrum payment

2QFY23 Performance - O2C
 
* O2C segment performance affected by subdued demand, weak margin environment across downstream chemical products and transportation fuels on a sequential basis
* Throughput marginally lower (down 0.5% YoY) at 18.6 MMT
* Planned turnaround of primary and secondary processing units of SEZ refinery in September 2022 for routine M&I
* Production meant for sales lower by 3.6% YoY at 16.2MMT
* O2C Revenue up 32% YoY to ₹ 159,671 crore
* EBITDA down 6% YoY to ₹ 11, 968 crore largely impacted by SAED related cost of ₹ 4,039 crore
* Transportation fuel cracks remained firm YoY but declined sharply QoQ, with gasoline cracks being affected the most
* Diesel crack average at $41.1/bbl v/s $51.6/bbl in 1QFY23
* Gasoline cracks average at $8.9/bbl v/s $29.8/bbl in 1QFY23
* ATF cracks average at $32.4/bbl v/s $39.2/bbl in 1QFY23
• Stable polyester chain deltas, however, polymer margins impacted by subdued demand in China and India, as well as price volatility
* Polymer deltas declined 12-26% with sharper fall in product prices
* Polyester chain delta up marginally (1%). Strong downstream margins (up 25-30%) offset by weak PTA and MEG margins due to capacity overhang in those products.
* Domestic oil demand environment
* 2QFY23 oil demand at 52.6MMT, up 10% YoY
* Gasoline demand up 9% YoY with higher automobile sales and continuing momentum in tourism
* Diesel demand up 11% YoY with normalized economic activities and resilient farm sector demand due to harvesting season
* ATF demand up 60% YoY with domestic air traffic now above pre-covid level
* Domestic polymer/polyester demand
* Polymer demand up 1% YoY led by healthy PVC demand. Polymer supply constrained due to planned outage by Indian producers
* Polyester demand up 2% YoY with growth in PET and PSF demand

2QFY23 performance - Oil & Gas

• Revenue at ₹ 3,863 crore, up 2.3x YoY
• EBITDA at ₹ 3,158 crore, up nearly 3x YoY led by higher production and improved realization
o KG D6 production up 5% YoY at 41.2 BCFe
o 2QFY 23 average KG D6 gas production at 19 MMSCMD, around 20% of India’s domestic gas production
• KG D6 MJ field on track to commence production by year end; with incremental production KG D6 block will produce ~30% of India’s gas.
 
2QFY23 performance - Retail
 
1. Reliance Retail posts best ever revenue and profits led by broad-based growth across consumption baskets.
 
2. Gross revenue for 2Q FY23 was Rs 64,920 crore, a 43% increase YoY and 11% increase QoQ.
 
3. All consumption baskets deliver high double digit LFL growth on the back of events and festive buying:
* Revenue for Grocery and Pharma doubles
* Revenue for Consumer electronics and Fashion & Lifestyle up >40% YoY
 
4. Business posted its highest-ever EBITDA of Rs. 4,404 crore, up 51% Y-o-Y and 15% Q-o-Q. EBITDA Margin on net sales was at 7.6%, up +30 bps YoY and +20 bps QoQ.
 
5. Business posted its EBITDA from operations of Rs. 4,286 crore, up 76% YoY.  EBITDA Margin on net sales was at 7.4%, up 130-basis point YoY resulting from favorable sales mix, positive operating leverage and operational efficiencies.
 
6. Reliance Retail expanded its physical store network with 725 new store openings with an area of 9.2 m sft, up 20% QoQ taking the total store count at the end of the quarter to 16,547 stores with an area of 54.5 m sq ft. Reliance Retail is the only Indian retailer with more than 50 million square feet of retail space under operation.
 
7. Reliance Retail received a record 180 million footfalls across formats and geographies in the quarter, a growth of 23% over Q2 FY 20 (pre-Covid period).
 
8. Reliance Retail continues to serve customers at scale as its registered customer base grew 28% YoY to reach 221 million at the end of the quarter.
 
9. The company delivered over 250 million transactions, representing a 45% increase YoY, a testament of consumer trust on Reliance Retail’s value proposition.
 
10. Digital and New Commerce posted a strong growth and contributed 18% of business
* Daily digital commerce orders up 72% YoY
* Merchant partnerships up >2x across geographies and consumption baskets
 
11. The business launched JioMart on WhatsApp native app during the quarter. An impressive 37% of orders received from this platform are from new customers who had not shopped on JioMart before.
 
12. Reliance Retail continues to innovate to serve customers using technology and product design capabilities as it launches three new store concepts - ‘Azorte’, a tech-aided premium fashion store format; ‘Centro’, a fashion & lifestyle departmental store format and ‘Fashion Factory’, a format that offers value deals across brands to serve discerning customers.  
 
13. Reliance Retail became the first retailer in India to cross an employee base of 4 lakh employees as it add over 35,000 jobs during the quarter.