RIL’s Q3 Net Profit Holds Flat at ₹15,792 Crore – Retail and Jio Deliver While O2C Trails Due to Weak Demand

  • Oil-to-data giant Reliance Industries reported a net profit of ₹15,792 crore in Q3, slightly above analyst estimates.
  • The revenue contribution from the oil-to-chemical segment, Reliance’s bread and butter, continued to decline as a percentage of total revenue to 65.6% for the third consecutive quarter.
  • On the other hand, the consumer segments, Reliance Retail and Jio, led the growth during the quarter, with sales growing 18.6% and 20.9% year-over-year, respectively.

Reliance Industries, led by Mukesh Ambani, reported a net profit of ₹15,792 crore in the third quarter, slightly above analyst estimates. Reliance’s net profit for the quarter was only marginally higher than in the corresponding quarter last year. Financing costs and depreciation were also higher in Q3FY23. The company’s performance during the quarter was primarily led by the retail and telecom consumer segments, while the oil-to-chemical segment remained depressed due to weak demand and pressure on downstream margins.

Reliance’s total revenue in the third quarter was ₹2.2 lakh crore, up 5.1% year-on-year, beating analysts’ forecasts of ₹2.13 lakh crore.

On a sequential basis, sales fell 5.3%, while profits increased 15.6%.

Reliance’s profit in the third quarter of FY22 was increased by ₹2,836 crore due to an exceptional item, which was profit on shale gas sales. Excluding this exceptional gain, Reliance’s Q3 FY23 net profit would have increased 0.5% compared to Q3 FY22.

Reliance also announced a fundraising of up to ₹20,000 crore through non-convertible bonds to be issued through a private placement.

Weak demand and pressure on downstream margins are weighing on the O2C business

Reliance’s bread and butter business, the oil-to-chemicals (O2C) business, continued to experience margin pressure and weak demand.

“Downstream chemical products have witnessed margin pressure with oversupply and relatively weak regional demand. Our focus remains on operating safely and reliably and producing vital fuel and materials for consumers,” said Mukesh Ambani, chairman and general manager of Reliance Industries.

The contribution of the O2C segment to Reliance’s total revenue continued to decline – to 65.6% in Q3, from 68.5% in Q2 and 72% in Q1.

Revenue of Reliance’s O2C business fell compared to the previous quarter – at ₹1,44,630 crore, it lagged 9.5% on Q2 revenue.

The impact of weak demand and pressure on downstream margins was visible in the O2C segment’s earnings before interest, tax, depreciation and amortization (EBITDA), which rose just 2.9% year-on-year to ₹13,926 crore, while segment revenue increased by 10.3% to ₹1,44,630 crore during this period.

Also weighing on O2C EBITDA was special ancillary excise duty which accounted for ₹1,898 crore in Q3.

Q2 of Reliance Industries in numbers:

Particularities Q3 FY23 2nd quarter FY23 Q3 FY22
Gain ₹ 2,20,592 Crore ₹ 2,32,863 Crore ₹ 2,09,823 Crore
Net profit ₹15,792 crore ₹13,656 crore ₹ 18,549 crore*
Net margin 7.2% 5.9% 8.8%

Source: Business Reports | *including an exceptional profit of ₹ 2,836 crore

Finance costs continue to weigh on the overall performance of the company, rising 36.5% year-on-year to ₹5,201 crore – something highlighted in an earlier India report could soon become an issue for companies with high debts.

Retail continues to beat inflationary concerns

Reliance’s retail segment showed healthy growth, even though inflation remains an issue for many. The retail segment reported an 18.6% year-on-year revenue growth to ₹60,096 crore while the net profit of the segment grew by 6.2%.

Overall, however, EBITDA was higher in absolute terms as retail segment revenues increased both sequentially and year-over-year to reach ₹4,773 crore.

“Retail continued to make strong progress with more Indians choosing to shop at Reliance Retail stores,” added Ambani.

Reliance also announced that the retail segment’s footprint has increased to 60.2 million square feet, compared to 40 million square feet last year. At the end of the quarter, the company’s total number of operating stores was 17,225.

Overall, Reliance recorded a total of 201 million visitors across all formats and geographies in the December quarter, which is the highest number ever. On an annual basis, visitor numbers increased by 25.6%.

During the quarter, Reliance Retail launched a new brand called Independence and also acquired beverage brand Sosya and confectionery brand Lotus Chocolate.

Digital efforts through JioMart also saw an increase during the quarter, with the total catalog growing 71% on a sequential basis, while the seller base grew 83% over this period.

Jio delivers modest growth in profit, ARPU and subscribers

The company’s telecom arm, Reliance Jio, posted a modest 3.2% sequential increase in its net profit after a subdued September quarter, in line with analyst expectations.

India’s largest telco added 5.3 million new subscribers to its network, bringing its total to 432.9 million subscribers, in line with analyst expectations.

The average revenue per user saw a moderate increase of 0.6% to ₹178.2 from ₹177.2 in the previous quarter, largely due to a better mix of subscribers, the company said.


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