RIL Q3 net soars 38% as both energy, consumer businesses clock robust growth

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Billionaire Mukesh Ambani-led Reliance Industries Ltd (RIL) reported a net profit of Rs 20,539 crore in the third quarter of 2021-22, up 37.9% year-on-year as all business verticals saw strong growth, the oil-to-chemical (O2C), telecom and retail conglomerate said on January 21.

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The net profit of the company was boosted by a one-time gain of Rs 2,836 crore from sale of its upstream shale gas assets in Eagleford in Texas, USA, with which the company exited from the shale gas play in North America. The consolidated revenue for the country’s most valuable company by market capitalisation rose 52.2% YoY to Rs 209,823 crore in the quarter. The company said that it clocked record earnings before interest, tax, depreciation and amortization (EBIDTA) led by its O2C, oil and gas, retail and digital services.

Also read: Reliance Jio Q3 | Tariff hike improves profitability, subscriber base falls on SIM consolidation

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Brokerages had expected RIL to report 50-60 percent YoY growth in its consolidated revenues at Rs 1.81-1.91 lakh crore for the quarter, and a 12-16 percent growth in post-tax profit (PAT) to Rs 14,800-15,300 crore for the quarter.

“Both our consumer businesses–retail and digital services–have recorded highest ever revenues and EBITDA. During this quarter, we continued to focus on strategic investments and partnerships across our businesses to drive future growth,” Chairman and Managing Director Mukesh Ambani was quoted as saying in a statement.

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Shares of RIL closed today at Rs 2,478.10 a piece, almost unchanged from the previous close ahead of the results. The share has gained close to 20% in the past one year.

“We are making steady progress towards achieving our vision of ‘net carbon zero’ by 2035. Our recent partnerships and investments in technology leaders in the solar and green energy space is illustrative of our commitment to partner India and the world in the transition to clean and green energy,” Ambani said.

Energy Business

RIL’s biggest business, the O2C business, reported growth for the sixth sequential quarter with continuing recovery in fuel margins. The O2C segment revenue for 3Q FY22 was up 56.8% YoY at Rs 131,427 crore, driven by higher output and improved price realization supported by an increase of 80% in crude oil prices.

“The recovery in global oil and energy markets supported strong fuel margins and helped our O2C business deliver robust earnings. Our oil and gas segment delivered strong growth in EBITDA with volume growth and improved realization,” Ambani said.

RIL’s total throughput, including refinery, rose 5.3% sequentially to 19.7 MMT. The business witnessed better transportation fuel cracks and higher polyester chain delta. But EBITDA margin for the quarter declined by 130 basis points to 10.3%, which the company attributed to base effect driven by higher feedstock and product prices.

Joint Chief Financial Officer V Srikanth said that while there is continued recovery in global oil demand, India’s oil demand remained muted due to weak diesel consumption.

The oil and gas business revenue soared 494% YoY to Rs 2,559 crore in 3QFY22. Segment EBITDA also increased 79.4% to Rs 2,033 crore, fuelled by the ramp-up of gas production from the company’s KGD6 block in the Krishna-Godavari basin of the Bay of Bengal and improved price realization.

The company said that the development of its MJ field in KGD6 is on track and likely to start production from 3QFY23 and achieve output of 30 mscmd in 2023.

Consumer Businesses

The Jio Platforms business reported gross revenue of Rs 24,176 crore in the December quarter, up 13.8% after adjusting for Interconnect Usage Charges (IUC).

RIL said that healthy subscriber addition of 34.6 million was to some extent offset by the churn due to SIM consolidation and repurposing of customer retention.

Average revenue per user (ARPU) improved to Rs 151.6, led by better subscriber mix and recent tariff hike. The company expects the full impact of tariff hike to be reflected in ARPU and financials over the next few quarters.

Reliance Retail posted all-time-high revenue and EBITDA in the quarter as operating environment returned to normalcy after being hit by the pandemic and was boosted by the festive season. Store footfall recovered to 90% of pre-Covid levels and the company added 837 new stores and 73 supply chain locations. But it witnessed disruption in December due to the Covid-19’s third wave.

The retail business reported a 23% YoY increase in its consolidated net profit at Rs 2,259 crore in the third quarter. Consolidated revenue from operations increased over 53% to Rs 50,654 crore in the quarter.

RIL’s media business revenue from operations, net of GST, rose 16.5% YoY to Rs 1,657 crore in the December quarter, driven by strong growth in ad revenues in both news and entertainment businesses. EBITDA in the quarter grew 15.1% to Rs 373 crore.

Multi-billion dollar refinancing

Earlier this month, RIL raised $4 billion in the largest ever foreign currency bond issuance from India. “We also prepaid Rs 31,000 crore of high coupon spectrum liabilities, which was at 9.2% -9.7%. This has resulted in an expected annual savings of Rs 1,200 crore per year. Within a very short span we have effectively refinanced multi billion dollars of debt,” Srikanth said.

The company had an outstanding debt of Rs 244,708 crore as on end-December. Its cash and cash  equivalents stood at Rs 241,846 crore.

In the quarter ended December, it spent Rs 27,582 crore on capital expenditure.

“Our performance continues to be strong and it is it is across all our business segments. Cash flows and balance sheet remain strong; it can support growth initiatives across our businesses,” Srikanth said.

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