Reliance Industries (RIL) on Friday reported a 15% year-on-year decline in net profit to Rs 15,792 crore during the October-December quarter, constrained primarily by higher finance cost, depreciation and special additional excise duty (SAED). Profit was below the Bloomberg consensus estimate of Rs 16,037.40 crore.
Depreciation increased 32.6% y-o-y to Rs 10,187 crore due to an expanded asset base across all businesses and higher network utilisation in the digital services business. Finance cost increased 36.4% y-o-y to Rs 5,201 crore due to an increase in interest rates and loan balances. Proactive resource management helped contain the impact of sharp hike in rates by RBI, the company said.
The board also approved raising Rs 20,000 crore through non-convertible debentures.
Revenues from operations during the period increased 15.3% y-o-y to Rs 2.20 trillion, supported by continuing growth momentum in consumer businesses, which was largely in line with Bloomberg estimates of Rs 2.29 trillion. The digital services segment achieved 20.4% y-o-y growth, while the retail segment grew 17.2% y-o-y. Higher realisation in the oil-to-chemical (O2C) business, with an increase in energy prices along with nearly 2x growth in the oil and gas business, also contributed to growth in revenue.
“Our strong balance sheet and robust cash flows remains the cornerstone of our commitment to growing existing businesses as well as investing in new opportunities,” Mukesh Ambani, chairman and managing director, Reliance Industries, said.
The oil-to-retail-to-telecom conglomerate’s Ebitda (earnings before interest, tax, depreciation and amortisation) surged 13.5% y-o-y to Rs 38,460 crore, supported by strong growth in the subscriber base and 17.5% increase in Arpu (average revenue per user) in the digital services segment, growth across consumption baskets, addition of new stores and rising contribution from digital channels in retail segment.
Consolidated Ebitda margins remained flat with a decline of 30 basis points y-o-y at 17.4% during the quarter.
The O2C segment’s growth in Ebitda was supported by strength in middle distillate cracks. This was, however, partially offset by weak margins across polymer, polyester chain and light distillates products. Continued special additional excise duty (SAED) on transportation fuels also impacted earnings by Rs 1,898 crore. The revenue of the O2C segment for the quarter increased by 10% y-o-y to over Rs 1.44 trillion primarily on account of higher price realisation as crude oil prices went up by 11%. Revenue growth was constrained by lower throughput with planned maintenance and inspection activity turnaround during the quarter. Exports increase was led by higher price realisations despite lower downstream product volumes.
In the oil and gas segment, revenue increase was led by improved gas price realisation and higher production. Average gas price realised for KGD6 was at $11.3/ MMBtu during the quarter against $ 6.1/ MMBtu in the quarter ended December 31, 2021. This was with the government raising the gas price ceiling to about $12.46/MMBtu. Ebitda increased sharply to Rs 3,880 crore, which is up almost 2x on y-o-y basis. Ebitda margin was at 86.7%.
Gross debt as on December 31, 2022, was over Rs 3.03 trillion against Rs 2.94 trillion as on September 30, 2022. Cash and cash equivalents were at over Rs 1.93 trillion, against Rs 2.01 trillion at the end of September. RIL’s net debt at the end of December quarter stood at over Rs 1.10 trillion from Rs 93,253 crore at the end of the September quarter, due to accelerated capital expenditure towards 5G rollout and a ramp-up in retail operations. The capex for the quarter was Rs 37,599 crore. The company said net debt is lower than annualised Ebitda.