Reliance Q1 Results: Net profit declines 5.4% y-o-y to ₹15,138 crore: Revenues improve 12% y-o-y

Mumbai: Reliance Industries Limited (RIL) on Friday reported a dip in net profit for the April-June quarter due to a weaker performance in its key oil-to-chemicals (O2C) business, where margins narrowed despite better demand. The dip was broadly in line with street estimates.

At the same time, better performance across other key business segments helped partially arrest the margin decline at India’s most valuable company.

The Mukesh Ambani-led conglomerate reported a consolidated net profit of ₹17,445 crore, which was more than 4% lower compared to the same period last year. This compares to a consensus estimate of ₹17,416 crore from analysts polled by Bloomberg.

Consolidated revenue from operations during the quarter grew 12% to ₹2.36 trillion, led by higher realizations for its O2C business. The street had estimated a top line of ₹2.32 trillion.

RIL reported consolidated earnings before interest, tax, depreciation and amortization (Ebitda) of ₹42,748 crore during the quarter, which was 2% higher year-on-year. Ebitda margin, however, narrowed by 1.5 percentage points to 16.6%.

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Ebitda contribution from all key business segments except O2C improved compared to the year-ago period.

“Consolidated Ebitda for the quarter improved from a year ago with strong contribution from Consumer and Upstream businesses offsetting weak O2C operating environment,” Ambani, the company’s chairman and managing director, said in a press statement. “Reliance’s resilient operating and financial performance in this quarter underscores the strength of its diverse portfolio of businesses.”

O2C Revenue Grows

The O2C business portfolio includes refineries that produce transportation fuels and downstream products like polymers, intermediates and polyesters. Revenue from the segment improved, supported by higher fuel prices. But the margin narrowed due to lower spread for transportation fuels and downstream chemicals.

“The deep integration and flexibility built into our O2C business model helped mitigate the impact of challenging operating environment. The business was impacted by lower fuel cracks with tepid global demand and ramp-up of new refineries,” Ambani said.

Among other business segments, the oil and gas business and the retail segment showed the steepest Ebitda growth of 30% and 10%, respectively.

Revenue and Ebitda grew in the oil and gas segment, which includes oil exploration and production, on account of higher volumes.

“The oil and gas segment continued its growth trajectory with higher production, offsetting lower year-on-year gas price realizations,” Ambani said.

Retail Network Expands

Meanwhile, network expansion and higher footfall aided the retail business performance. The business expanded its store network with 331 new store openings during the quarter, taking the total store count to 18,918.

“The steady expansion and growth of our retail business not only signifies our commitment to customer centricity but also mirrors the resilience and vitality of the Indian growth narrative,” said Isha M. Ambani, executive director, Reliance Retail Ventures Limited.

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The digital services business, which houses India’s largest telecom provider Jio, reported an 11% growth in revenue and a 9% growth in Ebitda, compared to the preceding year.

“The digital services business registered an impressive financial performance year-on-year, continuing its positive growth momentum,” the senior Ambani said.

Reliance committed capital expenditure of ₹28,785 crore during the quarter, which was significantly lower than the ₹39,645 spent during the same period in the previous year.

The company’s net debt as of 30 June dipped sequentially and year-on-year to ₹1.12 trillion. Net debt to Ebitda ratio, when annualized, improved to 0.66 from 0.76 in the preceding quarter. Net debt to Ebitda was 0.62 in the year-ago period.