Reliance Industries Limited (RIL) on Friday reported 22.5% year-on-year growth in consolidated net profit to Rs 16,203 crore for the quarter ended March, which was below analyst expectations of Rs 17,167 crore.
The oil-to-telecom conglomerate’s consolidated sales rose 36.8 percent year-on-year to Rs 2.1 lakh crore for the reported quarter, which matched Street’s estimate of Rs 2.1 lakh crore.
The company’s board of directors has also recommended a dividend of Rs 8 per share for the fiscal year ended March 31, 2022.
For the 2021-2022 fiscal year, the company reported record gross sales of Rs 7.92 lakh crore or $104.6 billion, making the company the first Indian company to hit the $100 billion turnover mark. RIL also reported a record annual consolidated net profit of Rs 67,845 crore for the fiscal year.
“Despite the ongoing challenges of the pandemic and heightened geopolitical uncertainties, Reliance delivered a robust performance in FY2021-22,” Chairman and Chief Executive Officer 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 shown a strong recovery despite the volatility in the energy markets,” said Ambani.
Business performance
The company’s strong sales growth was driven by its oil-to-chemicals business, which reported 44.3 percent year-over-year sales growth, followed by retail, where revenues grew 23.2%.
Growth in the oil-to-chemicals business was driven by the refining side of the business, where rising global refining margins during the quarter benefited the company’s performance.
The strong top-line performance reflected in the company’s operating show, as well as the company’s consolidated operating profit, increased 27.7 percent year-on-year to Rs 33,968 crore.
Oil-to-Chemicals
Reliance Industries’ refining and petrochemicals business delivered a stellar performance in the March quarter, helped by tightness in the global refining market that pushed margins higher.
Operating profit of the oil-to-chemicals segment increased nearly 25 percent year-on-year to Rs 14,241 crore, led by multi-quarter high cracks in transportation fuel, which were partially offset by lower polymers and intermediates margins and higher energy costs.
The overall increase in global crude oil prices fueled a 44 percent sales growth in the segment, which was also supported by 4.2 percent volume growth amid a steady recovery in demand.
However, operating margin for the quarter in the O2C segment declined 150 basis points year-over-year to 9.8 percent. “This was mainly due to the base effect caused by higher raw material and product prices,” RIL said.
Jio platforms
RIL’s digital services business continued to perform strongly, led by its telecoms business, which reported sequential revenue growth of 8 percent and net profit growth of 15.4 percent quarter on quarter.
The digital segment’s operating profit grew 27.4 percent year-on-year to Rs 10,918 crore and contributed a third to the quarter’s consolidated operating profit.
The telecom company’s average revenue per user rose 10.5 percent on a quarterly basis to Rs 167.6 as a result of the benefits of tariff increases the company implemented last year.
The telecom subscriber base was 410.2 million at the end of the March quarter, as the company lost 10.9 million users during the quarter as a result of continued user base consolidation.
retail dependence
Organized retail had a resilient performance in the reported quarter, despite the threat of the spread of the Omicron variant of COVID-19 earlier in the quarter.
The sales of the segment increased by 23.1 percent and reached a quarterly turnover of Rs 50,834 crore. “The headwinds from the COVID situation in January were offset by robust growth in February and March as the company took advantage of festive events and the early start of the summer season,” RIL said.
While retail operating profit grew 16.3 percent year-on-year to Rs 3,584 crore, operating margins declined 40 basis points to 4.1 percent due to the impact of high inflation.
RIL said it opened 793 stores in the March quarter and saw double-digit growth in all consumer baskets. The digital side of the business got off to a good start as daily orders more than doubled year on year.
“The food business continued to grow and posted its best quarter ever, driven by strong growth in its store formats, digital and new commerce platforms,” RIL said.
oil gas
The revival of the company’s oil and gas business continued, aided by a favorable business environment given the strong rise in international natural gas and crude oil prices.
The segment’s revenues increased 137 percent year-on-year to Rs 2,008 crore, while operating profit more than tripled to Rs 1,556 crore.
Gas production from KGD6 fields during the reported quarter was 37.7 billion cubic feet (RIL’s share) compared to 15 billion cubic feet in the same quarter a year earlier.
RIL’s average realization 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, Reliance Industries shares closed 0.5 percent lower at Rs 2,628 on the National Stock Exchange.
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