Reliance Industries net profit jumps 27% in Q2

Reliance Industries Ltd on Friday reported a 27 per cent jump in its September quarter net profit as earnings from the oil and gas business rebounded, and a pick-up in fashion and grocery helped boost retail revenues.

The oil-to-retail-to-telecom conglomerate's consolidated net profit of Rs 17,394 crore, or Rs 25.71 per share, in July-September - the second quarter of the current 2023-24 fiscal - was 27.3 per cent higher than Rs 13,656 crore, or Rs 19.92 a share, earning a year back, the company said in a statement.

The net profit was also higher quarter-on-quarter compared to Rs 16,011 crore earnings in the preceding three months ended June 30.

After a quarter of weaknesses in the oil-to-chemicals business, strong fuel and petrochemical demand and a cut in windfall profit tax on exports helped a rebound in revenues of the company's core business.

The firm helmed by billionaire Mukesh Ambani saw retail business getting good traction with growth in fashion and lifestyle as well as grocery and consumer electronics.

Telecom revenues posted a modest increase as the company has not yet announced a tariff plan for 5G services even though there was a jump in data consumption with consumers migrating from faster networks.

Its revenue was almost flat at Rs 2.55 lakh crore.

Finance cost rose 26 per cent to Rs 5,731 crore due to higher interest rates and loan balance.

Depreciation/amortisation expenses were up 30 per cent to Rs 12,585 crore due to an expanded asset base across all businesses and higher network utilisation in the digital services business.

This is the second straight quarter of a rise in finance costs and depreciation.

Operationally, the company posted a 30 per cent growth in EBITDA or earnings before tax at Rs 44,867 crore.

The mainstay oil refining and petrochemicals business, called O2C, posted a 36 per cent jump in EBITDA to Rs 16,281 crore on "strength in gasoline and PVC margins, optimised feedstock sourcing and lower special additional excise duty (SAED or windfall profit tax) in line with the decline in middle-distillate cracks," the statement said, adding exports fell 3 per cent.

With the consumer base swelling to 459.7 million from 448.5 million at the end of June and per-user revenues rising to Rs 181.7 from Rs 180.5, Reliance Jio Infocomm Ltd - the digital services business - posted a 12 per cent rise in net profit to Rs 5,297 crore in Q2.

Also aiding the business was consumers migrating to its latest offering 5G services.

Profits from the retail business climbed 21 per cent to Rs 2,790 crore as store count rose to 18,650 from 18,446.

Oil and gas EBITDA soared 50 per cent to Rs 4,766 crore as the price for gas produced from the KG-D6 block rose.

"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 standard cubic meters per day" as compared to 27 mmscmd in the preceding quarter," it said.

The company said its outstanding debt declined to Rs 2.95 lakh crore from Rs 3.18 lakh crore at June end.

Commenting on the results, Mukesh D Ambani, Chairman and Managing Director, of Reliance Industries Limited said: "Strong operational and financial contribution from all business segments has helped Reliance deliver another quarter of robust growth."

Jio, he said, remains committed to the vision of a digital India through the launch of two innovative and transformative offerings, JioAirFiber and JioBharat phone.

"Based on our state-of-the-art standalone 5G network, JioAirFiber significantly expands the reach and benefit of high-speed connectivity to millions of households across India.

"JioBharat phone will enable digital inclusion for millions of Indians and catalyse India's transformation to next-gen connectivity solutions."

Ambani reiterated that by December 2023, Reliance will also complete the pan-India rollout of 5G services, setting "a new global benchmark for the fastest roll-out of a 5G network across a large nation".

Ambani said Reliance Retail continued to rapidly expand its offline and online presence while adding to its already impressive range of products and offerings.

"We are providing a fresh and friendly shopping experience across our seamless ecosystem.

"The strength and diversity of our retail business model is consistently delivering robust performance."

The resilient performance of the O2C 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.

"The growth of oil and gas business is particularly noteworthy with production from KG D6 block ramping up and providing valuable fuel for the energy transition to the Indian economy."

The capital expenditure for the quarter was Rs 38,815 crore, with continuing accelerated investments in the pan-India 5G rollout.

While engagement on the Jio network remained strong with an addition of over 3 Exabytes of data traffic for the second successive quarter, total data and voice traffic increased 28.6 per cent to 36.3 billion GB and 8.3 per cent year-to-year to 1.33 trillion minutes.

Reliance Retail recorded footfalls of over 260 million across formats, a growth of 40.5 per cent year-on-year.

Digital commerce and new commerce businesses continued to grow and contributed 19 per cent of revenue.