Reliance Industries Q2 Results: Profit Rises 8.6% In Line With Estimates

Reliance Industries Ltd.'s second-quarter profit rose on higher sales and overall performance.

The Mukesh Ambani-led conglomerate’s consolidated net profit attributable to owners rose 8.63% sequentially to Rs 17,394 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 17,850.9 crore consensus estimate of analysts tracked by Bloomberg.

RIL Q2 FY24 Highlights (QoQ)

• Revenue from operations rose 11.44% to Rs 2.34 lakh crore (Estimate: Rs 2,23,433.6 crore).

• Operating profit increased 7.54% to Rs 40,968 crore (Estimate: Rs 40,321 crore).

• Operating margin stood at 17.66% vs 18.35% sequentially.

Strong operational and financial contributions from all business segments have helped Reliance deliver another quarter of robust growth, Ambani, chairman and managing director at Reliance Industries, said in the statement.

Resilient performance of the oil-to-chemicals segment despite volatility in energy markets was led by strong growth in fuel demand in a supply-constrained market, he said.

“Weak global demand and supply-overhang continued to impact downstream margins,” he said. “The growth of oil and gas business is particularly noteworthy with production from KGD6 block ramping up and providing valuable fuel for energy transition to the Indian economy.”

The company reported cash and cash equivalent of Rs 1,77,960 crore against Rs 1,92,064 crore in the prior quarter. It includes Rs 10,347 crore capital raised in Reliance Retail Ltd. The figures for the previous period were restated to reflect demerger of financial services business.

The company incurred a capex of Rs 38,815 crore against Rs 39,645 crore in previous quarter, excluding amount incurred towards spectrum and is adjusted for capital advances and regrouping of assets, the company said.

The company has an outstanding debt of Rs 2,95,687 crore against Rs 3,18,685 crore as of June.

Segmentwise Performance

O2C Segment

The O2C segment revenue in Q2 FY24 fell by 7.3% YoY to Rs 1,47,988 crore, or $17.8 billion, primarily on account of a sharp reduction in crude oil prices and lower price realisation of downstream products. Crude prices dropped by $14.1 per barrel year-on-year.

The O2C operating profit for the period, however, rose by 36% YoY to Rs 16,281 crore, or $2 billion, led by strong gasoline and PVC margin, the company said. The operating profit was further aided by optimised feedstock sourcing and lower special additional excise duty, in line with decline in middle-distillate cracks, it said.

“Downstream contribution remained weak with lower Polyethylene, Polypropylene and Polyester chain deltas.”

Total throughput increased by 7.5% year-on-year to 20 million tonne per annum, while throughput for sales was up 5.6% YoY at 17.1 mtpa.

The company undertook maintenance and inspection activity in the second half of September for catalytic cracking unit, coker unit, refinery off-gas cracker and downstream units. The company had also shut down one crude unit during the quarter.

Oil & Gas

The oil and gas segment had a strong quarter with revenue rising 71.8% YoY on higher production of oil and gas, increase in KGD6 volume and price realisation for oil and condensate production from MJ fields.

The average price realised for KGD6 gas was $10.46 per million metric British thermal unit in Q2 FY24 versus $23.34 per MMBTU a year ago. The average price realised for the coal bed methane gas was $14.15 per MMBTU for the quarter versus $22.48 per MMBTU a year ago.

Segment Ebitda rose 50.3% YoY to Rs 4,766 crore, while the operating margin was down 1,030 basis points year-on-year to 72%. Margin was compressed during the quarter due to higher costs related to commissioning and ramp-up of MJ field and decommissioning activities at Tapti field.

The company has successfully completed the drilling campaign for the MJ wells, with all the eight wells now completed, connected, and producing, the company said.

“With incremental gas production from MJ field, along with ongoing production from R Cluster and Satellite Cluster fields, Block KG D6 is currently producing around 29 million metric standard cubic meters per day. This is in line with the company’s target of 30 MMSCMD by FY24, that will be 30% of India’s total gas production,” V Srikanth, group CFO of RIL, said in a conference call.

“First exploration well in Block KG UDW1 is planned to be drilled in H2 FY24,” Srikanth said.

Jio Platforms

Operating revenue (net of GST) rose 10.7% YoY to Rs 26,875 crore. The growth was driven by subscriber growth across mobility and homes and scale-up of digital platforms, the company said.

Ebitda grew 12.6% YoY led by revenue increase and around 80 bps YoY increase in margin. Depreciation increased due to higher network utilisation and incremental addition to gross block.

Ebitda for the period was up 12.6% to Rs 13,528 crore, while the margin was up 80 basis points to 50.3%.

The segment continued to accelerate its growth with net subscriber additions of 11.1 million during the quarter, while the monthly churn was 1.7%.

The average revenue per user, an important metric that measures how much Jio earns from its subscribers, rose 2.5% YoY to Rs 181.7 driven by better subscriber mix across mobility and wireline segments. However, it was partially offset by the start of 5G services.

Engagement on Jio network remained strong with an addition of over 3 exabytes of data traffic for the second successive quarter in Q2 FY24, the company said.

Total data and voice traffic increased 28.5% and 8.3% YoY, respectively.

Reliance Retail Ventures

Reliance Retail delivered a strong performance with gross revenue rising 18.8% YoY to Rs 77,148 crore for the second quarter led by well-rounded growth across consumption baskets, the company said.

The grocery, fashion and the lifestyle businesses maintained a strong growth momentum, while consumer electronics had a steady performance despite festive period falling in the next quarter.

The Ebitda or operating profit for the period was up 32.2% YoY to Rs 5,820 crore. The operating margin on net sales was up 70 basis points at 8.1%, driven by operating leverage and continued focus on cost management.

Reliance Retail expanded its store network by adding 471 new stores, taking the total store count at the end of the quarter to 18,650 with an area of 71.5 million square feet.

Total footfalls in the quarter rose 40.5% YoY to over 260 million across formats, while the digital commerce and new commerce businesses continued to grow and contributed 19% to the retail revenues.

On Friday, shares of Reliance Industries rose 1.78% ahead of the earnings announcement as compared with a 1.01% rise in the benchmark Nifty 50.