Reliance Industries CMP: Rs 2,628 | The stock ended in the red on May 6 ahead of its Q4 earnings. The company is expected to report bumper earnings for the quarter ended March led by its refining, telecom and retail business even as the petrochemical operations may exhibit some weakness. The conglomerate is expected to report a 38 percent year-on-year rise in consolidated net profit at Rs 17,167 crore for the quarter ended March, according to an average of six brokerages polled by Moneycontrol.
Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Reliance Industries Limited on May 6 reported a 22.5 percent year-on-year growth in its consolidated net profit to Rs 16,203 crore for the quarter ended March, which was below analysts’ expectations of Rs 17,167 crore.
The oil-to-telecom conglomerate’s consolidated revenue from operations surged 36.8 percent year-on-year to Rs 2.1 lakh crore for the reported quarter, which met Street’s estimate of Rs 2.1 lakh crore.
The company’s board also recommended a Rs 8 per share dividend for the financial year ended March 31, 2022.
For the financial year 2021-22, the company reported a record high gross revenues of Rs 7.92 lakh crore or $ 104.6 billion making the company the first Indian company to achieve the $100-billion revenue mark. RIL also reported record annual consolidated net profit of Rs 67,845 crore for the financial year.
“Despite the ongoing challenges of the pandemic and heightened geo-political uncertainties, Reliance has delivered a robust performance in FY2021-22,” Chairman and Managing Director Mukesh Ambani said in a press statement.
“I am pleased to report strong growth in our Digital Services and Retail segments. Our O2C business has proven its resilience and has demonstrated strong recovery despite volatility in the energy markets,” Ambani said.
The strong topline growth of the company was driven by the oil-to-chemical business which reported a 44.3 percent on-year growth in sales followed by the retail business where revenues jumped 23.2%.
The oil-to-chemical business’ growth was driven by the refining side of the operations where surging global refining margins during the quarter aided the company’s performance.
The strong topline performance reflected in the company’s operating show as well as consolidated operating profit of the company jumped 27.7 percent on-year to Rs 33,968 crore.
The refining and petrochemicals business of Reliance Industries had a stellar showing in the March quarter aided by tightness in the global refning market that pushed margins higher.
The operating profit of the oil-to-chemicals segment surged nearly 25 percent on-year to Rs 14,241 crore led by multi-quarter high transportation fuel cracks, which was partially offset by lower polymer and intermediates margins and higher energy cost.
Overall surge in global crude oil prices drove the 44 percent sales growth in the segment, which was also supported by volume growth of 4.2 percent on steady recovery in demand.
However, operating margin for the quarter in the O2C segment declined by 150 basis points on-year to 9.8 percent. “This was primarily due to base effect driven by higher feedstock and product prices,” RIL said.
The digital services business of RIL continued its strong showing led by the telecom business, which reported 8 percent sequential growth in revenues and 15.4 percent on-quarter rise in net profit.
Operating profit of the digital segment grew 27.4 percent on-year to Rs 10,918 crore and contributed a third of the quarter’s consolidated operating profit.
The average revenue per user of the telecom business jumped 10.5 percent on-quarter to Rs 167.6 reflecting the benefits from tariff hikes taken by the company last year.
The telecom subscriber base stood at 410.2 million at the end of the March quarter as the company lost 10.9 million users during the quarter due to ongoing consolidation of the user base.
The organised retail business had a resilient performance in the reported quarter despite the threat from the spread of Omicron variant of COVID-19 earlier in the quarter.
Topline of the segment rose 23.1 percent to record quarterly sales of Rs 50,834 crore. “The headwinds posed by the COVID situation in January were offset by the robust growth in February and March as the business leveraged festive events and early setting of summer season,” RIL said.
While operating profit in the retail segment grew 16.3 percent on-year to Rs 3,584 crore, operating margins shrank 40 basis points to 4.1 percent reflecting the impact of high inflation.
RIL said it opened 793 stores during the March quarter and saw double-digit growth in all consumption baskets. The digital side of the business saw good traction in the year as daily orders more than doubled on a year-on-year basis.
“Grocery business continued its growth momentum and delivered its best ever quarter driven by strong growth across its store formats, digital and new commerce platforms,” RIL said.
Oil & Gas
The revival in the company’s oil and gas business continued aided by a favourable business environment given the surge in intrnational natural gas and crude oil prices.
Revenues of the segment rose 137 percent on a year-on-year basis to Rs 2,008 crore while operating profit rose more than three-fold to Rs 1,556 crore.
The gas production from KGD6 fields during the reported quarter was at 37.7 billion cubic feet (RIL’s share) as against 15 billion cubic feet in the year ago quarter.
RIL’s average realisation for its natural gas rose to $6.1 per mmBtu during the quarter from $3.99 per mmBtu in the year-ago quarter.
On May 6, shares of Reliance Industries ended 0.5 percent lower at Rs 2,628 on the National Stock Exchange.
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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