Reliances Q3 Net Profit Beats Street On Retail Boost

Net profit fell 15% to ₹15,792 crore in the three months ended 31 December from ₹18,549 crore in the year earlier on rising expenses. However, the December quarter profit beat the ₹14,537 crore consensus analyst estimate, according to a Bloomberg survey.

The company’s consumer-facing ventures, Reliance Jio and Reliance Retail, posted strong growth, even as improved refining margins boosted the oil-to-chemicals (O2C) business despite weakness in the petrochemicals segment. Additionally, higher gas prices benefited the oil and gas exploration and production business.

“Our teams across businesses have done an excellent job delivering strong operating performance through a challenging environment," said Mukesh Ambani, chairman and managing director of Reliance Industries.

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The O2C business revenue increased 10% from a year earlier on account of higher price realization. Brent crude per barrel averaged $88.7 in the December quarter, up by $9 from a year earlier. However, sequentially, it declined by $12.2 a barrel.

Ebitda (earnings before interest tax depreciation and amortization) for the segment was ₹13,926 crore, higher than the preceding three months’ ₹11,968 crore and the year-earlier’s ₹13,530 crore. The company attributed the decline in earnings from the preceding quarter to the imposition of special additional excise duty on fuel exports.

Rising gas prices benefited the oil and gas exploration and production business, with average gas prices for KGD6 at $11.3/mmbtu in the December quarter, up from $6.1/mmbtu in the year-earlier period. The government raised the gas price ceiling to $12.46/MMBtu. Ebitda doubled to ₹3,880 crore, and the Ebitda margin widened to 86.7%.

Consumer-facing businesses continued to perform well.

Reliance Jio, the country’s leading telecom provider, reported a 28% increase in net profit to ₹4,638 crore from a year earlier. Revenue rose 19% to ₹22,998 crore.

The average revenue per user (Arpu), a key profitability metric, rose 18% to ₹178.2 from a year earlier. Arpu for the preceding quarter was at ₹177.2 and ₹151.6 for the quarter ended December 2021.

Ebitda for Jio rose 25% to a record ₹12,519 crore, driven by strong customer growth and data consumption. “Retail business had another quarter of strong progress with more Indians choosing to shop at Reliance Retail stores," added Ambani.

The retail business saw revenues from operations grow 18.6% from a year earlier to ₹60,096 crore. Ebitda from operations rose 32% to ₹4,657 crore. The quarter recorded the highest-ever footfalls at 201 million across formats. The company added 789 new stores, taking the total number of stores to 17,225. Its operated area also expanded by about 6 million sq. ft to 60.2 million sq. ft. Digital and new commerce businesses contributed 18% of the segment revenues.

The company’s consolidated Ebitda grew 13.5% from a year earlier to ₹38,460 crore. Revenue from operations rose 15% to ₹220,592 crore.