JOIN USReliance Q3 net jumps 41.5% as 'two Rs' fire on all cylinders
Billionaire Mukesh Ambani's Reliance Industries Ltd on Friday reported a 41.5 per cent rise in its third-quarter net profit, helped by an uptick in two 'Rs' -- refining and retail, a recent tariff hike accelerating growth at Jio and a one-off gain from sale of US shale gas business.
The oil-to-retail-to-telecom conglomerate's consolidated net profit climbed 35.6 per cent sequentially and 41.5 per cent over the year-ago period to Rs 18,549 crore in the quarter ended December 31, 2021, the firm said in a statement.
Consolidated revenue of the nation's biggest company by market value rose 9.5 per cent over the previous three months and 52.2 per cent year-on-year to Rs 209,823 crore.
Reliance operates four business verticals -- the oil-to-chemical (or O2C) business includes its oil refineries, petrochemical plants, and fuel retailing business; retail business that houses brick-and-mortar stores and e-commerce; digital services that cover telecom arm Jio; and new energy business.
Three-fourths of the incremental EBITDA came from O2C and oil and gas business on the back of higher prices and demand returning with bouncing back of economy.
Refinancing liabilities towards the telecom spectrum saw the company returning to having a net debt. Its cash balance of Rs 241,846 crore was less than the gross debt of Rs 244,708 crore. The company had been net debt-free for the past few quarters.
O2C segment's operating profit rose sequentially for the sixth straight quarter, aided by improved refining margins and prices. EBITDA at Rs 13,530 crore was up 6.3 per cent quarter-on-quarter and 38.7 per cent year-on-year.
Inventory gains and recovery in petrol, diesel and jet fuel spreads aided refining margin in the third quarter.
Gas production provided a tailwind to earnings despite hiccups in chemicals.
The company had an exceptional gain of Rs 2,872 crore from sale of shale gas assets.
Jio Platforms -- the digital arm -- reported an 8.8 per cent higher net profit at Rs 3,795 crore as its average revenue per user rose to Rs 151.60 per month from Rs 143.6 in the previous quarter and Rs 151 in October-December 2020.
Jio's subscriber base grew, helped by its budget smartphone Jiophone Next. It added 10.2 million subscribers in Q3FY22.
Segment EBIDTA crossed Rs 10,000 crore mark for the first time.
But the full impact of its recent tariff hike will be visible in the fourth quarter (January-March).
Reliance Retail Ventures Ltd's EBITDA rose to Rs 3,822 crore as demand improved across categories during the festive season. Net profit from retail business rose 23.4 per cent to Rs 2,259 crore.
The growth was supported by retail demand in jewellery, electronics and grocery. Also, lower restrictions on mobility and higher operating days during the quarter were other drivers of the retail segment's sales.
It opened 837 new stores during the quarter, taking the total count to 14,412 stores. Revenue crossed the Rs 50,000 crore mark for the first time, rising above pre-pandemic levels.
Consumer businesses contributed Rs 75,000 crore of revenue.
Reliance's oil and gas segment posted a near 500 per cent YoY spurt in revenues to Rs 2,559 crore, with segment EBITDA of Rs 2,033 crore. This is on the back of production from newer fields in the KG-D6 block stabilising, taking the overall production to 18 million standard cubic metres per day.
Reliance Industries Ltd Chairman and Managing Director Mukesh D Ambani said the company has posted its best-ever quarterly performance in 3Q FY22 with a strong contribution from all businesses.
"Both our consumer businesses, retail and digital services have recorded highest ever revenues and EBITDA. During this quarter, we continued to focus on strategic investments and partnerships across our businesses to drive future growth," he said.
Retail business activity has normalised with strong growth in key consumption baskets on the back of the festive season and as lockdowns eased across the country. Digital services business has delivered broad-based, sustainable, and profitable growth through improved customer engagement and subscriber mix, he said.
"The recovery in global oil and energy markets supported strong fuel margins and helped our O2C business deliver robust earnings. Our Oil & Gas segment delivered strong growth in EBITDA with volume growth and improved realization."
Ambani said Reliance was making steady progress towards achieving the vision of Net Carbon Zero by 2035.
"Our recent partnerships and investments in technology leaders in the solar and green energy space is illustrative of our commitment to partner India and the World in the transition to clean and green energy. We continue to pursue growth initiatives and collaborate with global leaders who share our vision of a sustainable future for our planet," he added.
In recent months, Reliance has pivoted its clean energy business through acquisitions that will give it the technology and expertise to make solar equipment and energy storage system. While REC Group acquisition has given FBR tech for poly-si and PERC and HJT tech for modules, it has access to liquid metal battery tech from Ambri and Sodium-ion battery tech from Faradion.
The firm is expected to acquire tech for H2 electrolysers and fuel cells during the course of the year and initiate Phase 1 capex in these areas.
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