Last updated: 24 Jul, 2021 | 09:53 am
Revenue below estimates: Consolidated revenue from operations for the quarter increased 58.2% on-year to Rs 1.44 lakh crore, slightly below estimates of 1.54 lakh crore. In the dominant Oil-to-Chemicals (O2C), revenues rose sharply by 75.2% YoY to Rs 1.03 lakh crore from Rs 58,906 crore in the last year period, mainly on account of sharp increase in product prices on the back of higher crude prices. The chart below shows segment-wise gross revenues for Reliance Industries.
Profit beats estimates: Even though the topline was slightly below expectations, RIL’s net profit came in higher than street estimates in Apr-Jun 21 period. Reliance Industries posted a consolidated net profit of ₹12,273 crore, up 67% on-year. The company had posted a net profit of ₹13,233 crore, including exceptional gains, for the year-ago period. Analysts had earlier anticipated a net profit of about Rs 11,900 crore. On a quarterly basis, both the revenue and net profit registered declines of about 7%.
Margins expand: RIL's consolidated EBITDA came in at ₹27,550 crore, a record quarterly performance. This is up 27.6 percent YoY and 3.6 percent QoQ. EBITDA rose on the back of strong performance in oil-to-chemical (O2C) and digital services performance. The EBITDA margin improved 19.7% from 17.8%, up 190 bps in the quarter.
Reliance results: Segment-wise highlights
Reliance O2C performance: The O2C business of Reliance Industries posted a strong show for the quarter as revenues jumped 75.2% YoY to Rs 1.03 lakh crore. The segment’s operating profit soared 50% on-year to Rs 12,231 crore aided by strong show from the petrochemical business. O2C business benefited from favorable margins, feedstock and energy cost optimisations during the quarter. Further, stronger global demand was another important tailwind. This segment contributed about 45% to the company’s overall EBITDA. Weakness in domestic demand was offset by higher exports, and the throughput inched up 1.6% over the last quarter to 19 million metric tonnes.
Reliance Jio posts resilient performance: Reliance Jio posted a steady quarter as net profit increased 4% on-quarter to Rs 3,651 crore. The revenue from operations rose nearly 4% on-quarter to Rs 18,952 crore aided by net addition of around 14 million new subscribers. Reliance Jio’s ARPU remained largely flat at Rs 138.4 as compared to Rs 138 in the previous quarter. Customer base as on 30th June 2021 increased to 440.6 million (44.06 crore), net addition of 42.3 million (4.23 crore) customers from last year. Average data consumption per user per month increased sharply by 18% to 15.6 GB. The operating profit rose 3.7 per cent on-quarter to Rs 8,892 crore, while margins remained flat at 46.9% in Apr-Jun 21 period.
Reliance Retail: Reliance Retail's revenue from operations fell 18.7% on-quarter to Rs 33,566 crore during the quarter. Reliance Industries said that that the operating environment was challenging during the quarter as stores were shut because of various local lockdowns across the country. 'After second week of June, there were sporadic signs of easing with continued restrictions varying across geographies,' it said. 'Retail stores and digital could only sell essentials for most part of the quarter.” However, the segment has delivered good growth in terms of revenue and profit due to a lower base last year. The footfalls are at 46% of pre-COVID levels. Reliance said that the consumer sentiment is reviving but cautious.
Reliance Retail opened 123 stores in the quarter, taking the total count to 12,803. Another 700 stores are set to be commissioned as Covid-19 lockdown-related curbs are lifted. Stores operated at 70%, 25% and 38% of normal working hours during April, May and June, respectively, amid the pandemic's second wave.
Reliance Industries quarterly results review
While the company has posted robust results as compared to the previous year, the topline and bottomline have declined as compared to the previous quarter. This was mainly due to a lower base in the previous year. Further, the second wave of the pandemic has also hurt the company’s performance in retail and Digital Services segments. This time around, lacklustre performance in the retail segment was offset by strong performance in the O2C business, due to strong global demand as economies recover.
In its recent AGM, the company had announced that it will invest Rs 75,000 crore in New Energy over the next three years. Going forward, the company is clearly moving into a new capex cycle. Any progress around the Saudi Aramco deal, take-up of new smartphones, and developments in Omni-channel retail could be important triggers for the shares. As it stands today, the future growth and the roadmap of the company is oriented towards its consumer businesses (Reliance Retail, Jio and Jio Platforms). As the economy improves further, Reliance Industries would continue to see improvement in its business in the upcoming quarters.