On October 27, Reliance Industries Ltd (RIL) announced its financial results for the second quarter of the 2023-24 fiscal year. They reported a consolidated net profit of Rs 19,878 crore, showing a substantial increase of 29.7 percent compared to the previous year. This remarkable growth was achieved despite a dip in revenue from their oil-to-chemicals business. RIL attributed this success to the strong performance of its retail, Jio, and upstream businesses.
During the quarter that ended on September 30, RIL’s gross revenue from operations reached Rs 2.55 lakh crore, slightly higher than the Rs 2.52 lakh crore recorded in the same period the previous year. The net profit attributable to the company’s owners (profit after tax and minority interests) amounted to Rs 17,394 crore, a significant rise from Rs 13,656 crore in the corresponding period last year. Market expectations, as per a Moneycontrol survey of 10 brokerages, were also close, projecting a net profit of Rs 17,482 crore, marking a 27.2 percent increase year-on-year.
In addition, RIL’s earnings before interest, taxes, depreciation, and amortization saw a 30.2 percent increase, reaching Rs 44,867 crore in Q2 FY24.
Chairman Mukesh Ambani commented on these results, stating, “Despite the energy market’s volatility, our O2C segment showed a resilient performance, driven by a strong growth in fuel demand in a supply-constrained market. However, downstream margins were impacted due to weak global demand and supply overhang.”
RIL’s other business divisions, including the upstream segment, also reported a robust quarter.
Reliance Industries Limited Q2 2023 Financial Performance Overview
Reliance’s biggest business, the Oil-to-Chemicals (O2C) segment, reported revenue of Rs 1.47 lakh crore, showing a 7.3 percent decrease. This decline was primarily due to a significant 14 percent year-on-year drop in crude oil prices, leading to lower prices for the products they sell.
In terms of earnings, the Earnings Before Interest, Taxes, Depreciation, and Amortization for the quarter reached Rs 16,281 crore, marking a 36 percent increase compared to the same period last year. This growth was driven by strong margins in gasoline and PVC, efficient sourcing of raw materials, and a reduction in expenses in line with the decrease in the profitability of middle-distillate products.
Reliance’s Chief Financial Officer, Srikanth Venkatachari, explained that the performance of the downstream segment was affected by lower sales of delta polyethylene (-8%), polypropylene (-17%), and the polyester chain (-13%). This was partly due to subdued global demand in a market that was well-supplied. However, these challenges were somewhat offset by increased domestic sales and a significant 46% reduction in the price of ethane.
It’s important to note that Reliance’s O2C business encompasses various operations, including refining, petrochemicals, fuel retailing through Reliance BP Mobility Limited, aviation fuel, and bulk wholesale marketing.
Reliance Industries Limited, the Indian conglomerate, has reported strong financial performance across its key business segments in the second quarter of the fiscal year 2023. Here’s a breakdown of their impressive results:
Impressive Upstream Performance and Revenue Growth
The company’s oil and gas revenue, stemming from its upstream operations, soared by a remarkable 71.8 percent during the quarter. This increase can be attributed to higher gas and oil production, as well as the commencement of condensate production from the MJ field. Additionally, a 6 percent rise in gas prices in the KG D6 field contributed to this growth.
Notably, the average realized price for KGD6 gas reached $10.46 per MMBTU in Q2FY24, compared to $9.86 per MMBTU in the same quarter of the previous year. For CBM gas, the average realized price was $13.72/MMBTU in 2Q FY24, in contrast to $23.34 per MMBTU in Q2FY23. The segment’s EBITDA also saw a substantial increase, rising to Rs 4,766 crore, marking a 50.3 percent yearly growth. The company reported the successful completion of the drilling and completion campaign for MJ wells, with all eight wells now producing and connecting to the network.
“With incremental gas production from MJ field, along with ongoing production from R Cluster and Satellite Cluster fields, Block KG D6 is currently producing ~29 MMSCMDWith incremental gas production from MJ field, along with ongoing production from R Cluster and Satellite Cluster fields, Block KG D6 is currently producing ~29 MMSCMD,” the company mentioned in a press release.
Jio Platforms Reports Strong Q2 Performance and Promises Future Advancements
Jio Platforms, the telecommunications and streaming arm of Reliance reported a profit of Rs 5,297 crore for the second quarter, reflecting a 12 percent increase. The revenue from operations in this segment reached Rs 31,537 crore, up from Rs 28,506 crore in the same period last year. An essential metric for telecom companies, the Average Revenue Per User (ARPU), improved by 2.5 percent year-on-year to reach Rs 181.7 per user per month.
The Chairman of Reliance Jio Infocomm, Akash Ambani, expressed optimism about the future, stating that “Jio True5G will soon be available pan-India to usher in a new digital era for Indians.” He also mentioned the strong customer interest in JioAirFiber, which aims to transform broadband infrastructure in the country.
Impressive Financial Performance and Growth Strategy of Reliance Industries
Reliance Retail reported a net profit of Rs 2,790 crore in the quarter, reflecting a 21 percent increase. The revenue from operations reached Rs 77,148 crore, marking an 18.8 percent year-on-year growth. During the quarter, the company’s stores saw 260 million footfalls, up from 249 million in the previous quarter. The grocery and fashion & lifestyle businesses showed strong growth, while consumer electronics maintained steady performance.
Reliance Retail expanded its store network with 471 new store openings, bringing the total store count to 18,650 stores covering an area of 71.5 million square feet. Isha Ambani, Executive Director of Reliance Retail Ventures Limited (RRVL), expressed delight in delivering stellar results, highlighting the company’s customer-centric approach.
Reliance Industries’ net debt reduced to Rs 1.17 lakh crore in September, down from Rs 1.25 lakh crore in March. This reduction was attributed to funds raised in Reliance Retail, including investments from KKR & Co and Qatar Investment Authority (QIA), with plans to raise additional capital from the Abu Dhabi Investment Authority (ADIA) in October.
Reliance Industries anticipates strong global oil demand growth, particularly in transportation fuels, projecting 2023 demand to average at 101.8 mb/d, up 2.2 mb/d. In the retail business, the company plans to continue expanding its physical and online presence, with mergers and acquisitions remaining a core theme for further expansion. The company also expects its capital expenditure to peak in FY24, driven by the fast-track rollout of Jio 5G, set to be completed by the end of the year.
