RIL Q2: RIL Q2 Results: Cons PAT falls 0.2% YoY to Rs 13,656 crore despite sales growth, misses estimates

Reliance Industries ( ) unexpectedly reported a decline in consolidated net profit for the September quarter on Friday. The bottom line fell 0.2% yoy to Rs 13,656 crore, against expectations of double-digit growth.

The net profit is below the ET Now poll of Rs 15,664 crore. The bottom line declined despite consolidated sales rising almost 34% year-on-year to Rs 2.32 lakh crore.

The topline beat the ETNow poll of Rs 2.18 lakh crore.

Consolidated sales of the main oil-to-chemicals business grew more than 32% year-on-year in the quarter to Rs 1.59 lakh crore. This activity represented nearly 69% of RIL’s consolidated sales in the quarter.

Retail sales grew by almost 43% year-on-year to Rs 64,936 crore. The digital services business under the umbrella of Reliance Jio Infocomm registered a revenue growth of more than 21% to Rs 29,558 crore.

The operational performance of the O2C business was impacted by a lower gross refining margin in the refining business and the tax on unexpected gains. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter declined nearly 6% year-on-year to Rs 11,968 crore.

However, the retail and digital activities saw a strong improvement in operational performance. Retail EBITDA grew a whopping 51% year-on-year to Rs 4,414 crore, and that of digital services increased by about 29% to Rs 12,291 crore.

Retail and Jio Platforms EBITDA reached an all-time high in the quarter. Aided by the retail and digital business, the consolidated EBITDA increased by 14.5% year-on-year to Rs 34,663 crore.

“We saw consistent subscriber growth and greater engagement in the digital services segment… Our retail business delivered record performance with a strong pick-up in visitor numbers, store additions and digital integration,” Chairman Mukesh Ambani said in the press release.

“The performance of our O2C business reflects subdued demand and weak margins in downstream chemicals. Segment performance was also impacted by the introduction of special additional excise taxes during the quarter to provide stable supply and lower volatility in the domestic market,” Ambani added. .

DIGITAL BUSINESS

Jio Platforms Ltd’s consolidated net sales for the reported quarter increased nearly 23% year-on-year to Rs 24,275 crore, led by higher average revenue per user (ARPU) for the connectivity business.

The ARPU for the quarter was Rs 177.2, up from Rs 175.7 a quarter ago. EBITDA grew 29% year-on-year to Rs 12,011 crore on the back of strong revenues and margins. Operating margin increased by a sharp 250 basis points to 49.5% on the back of a higher ARPU, offsetting higher operating expenses. The telecom operator added 7.7 million net subscribers in the second quarter, while gross additions remained strong at 32.7 million. Jio’s total customer base was 42.76 crore as of September 30.

Jio announced the beta version of its True-5G services on the eve of Dussehra. The country’s largest provider by subscriber base aims to complete the pan-Indian 5G rollout by December 2023.

RETAIL BUSINESS

Reliance Retail reported 44.5% growth in consolidated net sales as the impact of the pandemic eased and the business environment moved at par with pre-Covid levels. The segment posted record sales and profit for the quarter, led by broad growth across all consumer packages. “Consumer sentiment on the city’s classes remained positive thanks to key promotional events and the early start of the festivities,” RIL said.

Reliance Retail expanded its physical store network with 795 new stores in the quarter, bringing the total number of stores at the end of the quarter to 16,617. Operating margin improved 130 basis points year-over-year to 7.4%, helped by a favorable mix, positive operating leverage and operational efficiency.

Within retail, consumer electronics saw strong double-digit growth, driven by higher bill values ​​and conversions as more customers visited stores. Meanwhile, the holiday season drove strong sales for the fashion and lifestyle segment.

O2C BUSINESS

The performance of this business, which accounts for the bulk of RIL’s consolidated sales and operating profit, was impacted during the quarter by both the refining and petrochemical segments.

Operating profit decreased 6% year-on-year, mainly due to the special additional excise tax on transport fuels and lower polymer deltas. The operating margin contracted by a sharp 310 basis points to 7.5%. Domestic demand for polymers improved only marginally during the quarter amid volatile crude oil and commodity prices driven by geopolitical situations. Polymer margins versus naphtha declined year on year due to a sharp decline in polymer prices amid lower demand from China and a volatile energy price environment.

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