Reliance Industries Q3FY22 Results Highlights: Reliance Industries Ltd has reported a 41.5% on-year jump in net profit to Rs 18,549 crore in the October-December quarter of the current fiscal year. Total income soared 52% on-year basis during the quarter to reach Rs 1.95 lakh crore. Segment breakdown of Reliance Industries’ results shows that the oil to chemical business of RIL reported a revenue of Rs 1.31 lakh crore, as against Rs 83,838 crore in the year-ago period. Jio Platforms reported a revenue of Rs 24,176 crore while net profit came in at Rs 3,795 crore. ARPU improved to Rs 151.6. The retail business of RIL delivered all-time high revenue of Rs 57,714 crore and a net profit of Rs 2,259 crore”.
“Retail business activity has normalized with strong growth in key consumption baskets on the back of festive season and as lockdowns eased across the country. Our digital services business has delivered broad based, sustainable, and profitable growth through improved customer engagement and subscriber mix,” said Mukesh Ambani, Chairman and Managing Director, Reliance Industries. He added that recovery in global oil and energy markets supported strong fuel margins and helped RIL’s O2C business deliver robust earnings.
Reliance Industries' Q3 strong growth was driven by robust performance across businesses especially from refining, telecom, retail and E&P (exploration and production) businesses, said the company. The margins in its refining and petchem business witnessed a healthy growth along with the volumes in these businesses. Higher ARPUs in telecom and recovery in global oil and energy markets supported strong fuel margins and helped RIL's O2C business deliver robust earnings.
– Highest ever store sales, continued momentum on Digital.
– Consumer electronics doubles aided by boost from devices.
– Apparel and footwear up 2x YoY on strong festive sales.
– Grocery sustains consistent and strong double digit growth momentum.
Store operations normalise in the quarter with reinforced safety standards. Footfalls back to pre-Covid levels (95%), up 30% over last year. Strong customer demand in Q3 as markets opened up. Digital commerce order (up 2x YoY) and merchant partnerships (up 4x YoY) continue to scale new heights. 837 stores and 73 supply chain locations added.
ARPU during the quarter came in at Rs 151.6 per subscriber per month which is a healthy 8.4% growth on an on-year basis and 5.6% growth on-quarter basis.
Reliance Jio per capita data and voice usage came in strong at 18.4 GB and 901 mins, respectively.
The Board of Directors of RIL has decided to implement a Scheme of Arrangement between (i) Reliance Industries Limited (RIL) and its shareholders and creditors; and (ii) Reliance Syngas Limited (‘RSL’) and its shareholders and creditors to transfer Gasification Undertaking of the Company to RSL (a wholly owned subsidiary of the Company) as a going concern on slump sale basis for a lump sum consideration equal to the carrying value of Gasification Undertaking as on the Appointed Date. The Scheme is subject to necessary statutory / regulatory approvals under applicable laws including approval of National Company Law Tribunal (NCLT).
Strong customers engagement in mobility and FTTH with monthly data traffic over 7.8 Exabytes
Reliance Eagleford Upstream Holding, LP a wholly-owned step-down subsidiary of RIL, signed the agreements with Ensign Operating III, LLC, a Delaware limited liability company to divest its interest in certain upstream assets in the Eagleford shale play of Texas, USA. With this transaction, Reliance has divested all its shale gas assets and has exited from the shale gas business in North America.
JioMart continues to scale up rapidly with higher traffic, customers and orders driven by attractive offers, wider regional assortment and superior service levels. The business continues to build fulfilment capacities to meet growing customer demand and offer faster deliveries.
RIL's grocery business sustained its strong and consistent double-digit growth momentum. delivering its all-time high revenue driven by higher footfalls and robust bill values. The business recorded its best-ever sales during the festive period backed by impactful offers focused on gifting and festive consumption.
– Network planning based on targeted customer consumption and revenue potential.
– Continuous planning, continuous deployment based on 5G handset
– Planning for infra and fibre readiness for 5G sites
Reliance Retail recorded Consolidated Gross Revenue of Rs 57,714 crore for 3Q FY22, a growth of 52.5% on-year. Gross Revenue from consumption baskets excluding Petro and Connectivity grew by 90% over the previous year to Rs 33,714 crore for 3Q FY22. “Reliance Retail delivered a landmark quarter posting all-time high Revenue and EBITDA as operating environment returned to normalcy,” RIL said.
The capital expenditure (including exchange rate difference) for the quarter ended December 31, 2021 was Rs 27,582 crore and for nine months ended December 31, 2021 was Rs 69,303 crore. Additionally, Rs 43,589 crore were incurred towards acquisition of Spectrum by Reliance Jio.
Exports (including deemed exports) from RIL’s India operations increased by 105.3% to Rs 64,781 crore ($ 8.7 billion) as against Rs 31,559 crore in the corresponding quarter of the previous year mainly due to both higher price realizations and higher volumes.
Revenue of Oil & Gas segment increased multi-fold led by ramp-up of gas production from KG D6 block. Revenue growth was also supported by higher gas price realization in KG D6 and CBM block, the company said.
Retail Segment revenues increased sharply with normalcy returning in operating environment. Retail registered its highest ever in-store sales and sustained growth momentum in digital & new commerce
For the quarter ended 31st December 2021, RIL achieved gross revenue of Rs 209,823 crore ($ 28.2 billion), as compared to Rs 137,829 crore in the corresponding quarter of the previous year. Revenue of O2C was driven by higher volumes and improved price realization on the back of 80% YoY increase in crude oil prices.
Reliance Retail recorded Consolidated Gross Revenue of Rs 57,714 crore for 3Q FY22, a growth of 52.5% YoY. Gross Revenue from consumption baskets excluding Petro and Connectivity grew by 90% over previous year to Rs 33,714 crore for 3Q FY22.
Reliance Retail's Net Profit for the quarter was Rs 2,259 crore, higher by 23.4%. Cash Profit for the quarter was Rs 3,277 crore.
Total 14,412 physical stores were operational of which 837 stores opened during the quarter.
Gross subscriber addition remained strong with total gross adds of 34.6 million in 3Q FY22 driven by both mobility and FTTH businesses. SIM consolidation and repurposing of customer retention efforts led to a net reduction of 8.4 million in customer base in 3Q FY22. This decline is mainly driven by subscribers with inconsistent engagement and lower-end subscribers, the company said.
Reliance Retail reported a Gross Revenue of Rs 57,714 crore, higher by 52.5% in the October-December quarter. EBITDA for the quarter was Rs 3,822 crore, higher by 23.8%.
Gross Revenue for the quarter was Rs 24,176 crore, higher by 13.8%. EBITDA for the quarter was Rs 10,008 crore, increase of 18.0%. Net Profit for the quarter was Rs 3,795 crore, growth of 8.9%.
Total customer base as on December 31, 2021 was 421.0 million, net addition of 10.2 million customers.
ARPU during the October-December quarter came in at Rs 151.6 per subscriber per month which is healthy 8.4% growth on-year basis (adjusted for IUC) and 5.6% growth on QoQQ basis. Net Profit for the quarter stood at Rs 3,795 crore, higher by 8.9% YoY.
The company reported EBITDA at Rs 10,008 crore, higher by 18.0% YoY, with this quarterly EBITDA has crossed Rs 10,000 crore for the first time. EBITDA Margin came in at 48.6%, increased 500 bps YOY led by change in IUC regime and ARPU increase in connectivity business.
Gross Revenue for the quarter was Rs 24,176 crore, higher by 13.8% YoY (adjusted for IUC). Quarterly operating revenue (net of GST) was Rs 20,597 crore, growth of 13.8% YoY, driven by higher ARPUs and increasing revenues from new services.
“Reliance has posted best-ever quarterly performance in 3Q FY22 with strong contribution from all our businesses. 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,” said Mukesh Ambani.
Reliance Jio's revenue in October-December quarter stood at Rs 19,347 crore.
The strong growth was driven by robust performance across businesses especially from refining, telecom, retail and E&P (exploration and production) businesses. The margins in its refining and petchem business witnessed a healthy growth along with the volumes in these businesses. Higher ARPUs (average revenue per user) in telecom and strong rebound in retail demand aided the growth in its telecom and retail business., said RIL.
Reliance Industries reported a consolidated profit after tax (PAT) of Rs 18,549 crore for the quarter ended December 2021, up 42 percent from Rs 13,101 crore registered in the corresponding quarter of the last financial year. The company had reported a profit of Rs 13,680 crore in the September 2021 quarter.
Reliance Industries reports total income at Rs 1.91 lakh crore. The Group's operations and revenue were impacted due to COVID-19. During the quarter ended December 31, 2021, there is no significant impact on the operations of the Group, said RIL
Reliance Industries reported a revenue of Rs 3,18,476 crore in the first half of the current fiscal year.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, expects RIL’s consolidated operating profit to grow by 7.8% sequentially and 30.1% on-year to Rs 28,062 crore. He expects RIL’s consolidated PAT to grow by 8.4% sequentially to Rs 14,823 crore.
Hemang Jani, Head Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services said that RIL’s O2C and retail are likely to drive growth this quarter. “Consolidated EBITDA is seen at Rs 300 billion (+39% YoY / +15% QoQ, primarily driven by growth in O2C, followed by Retail). “We expect O2C EBITDA at Rs 150 billion (+73% YoY / +21% QoQ), RJio EBITDA at Rs 95 billion (+17% YoY / +5% QoQ), and Retail EBITDA at Rs 36 billion (+41% YoY / +31% QoQ),” he added.
Reliance Industries share price fell 6% during the October-December quarter. The stock was trading at Rs 2,523.7 per share on October 1, 2021 and closed at Rs 2,368 per share on December 31.
In the previous quarter, RIL's Oil to Chemicals business had reported a revenue of Rs 1,20,475 crore.
Retail revenue stood at Rs 45,450 crore.
Digital Services revenue was Rs 24,362 crore.
“The company’s consolidated net profit in Q3 is seen up 10 per cent YoY because of strong gross refining margins and pick-up in retail business.”
International brokerage JP Morgan expects strong recovery in refining and E&P (exploration and production) to drive RIL's earnings growth. “Overall the two key components of the company’s refining margin slate, diesel and jet kero have seen cracks improving as transportation has picked up,” the brokerage said in its report.
ARPU is expected to be at Rs 150-153, against Rs 143.6 in Q2FY22, as Jio hiked its prepaid tariff in November 2021, effect from 01 December 2021. Updates on announcements in new energy business, growth in retail store additions, and any further pricing action in Telecom will be key monitorable.
~ HDFC Securities
Reliance Industries is expected to report YoY and QoQ better earnings on improvement in retail segments profitability, improvement in refinery margins and QoQ higher ARPUs and net subscriber addition of 6 million subscribers, according to Yes Securities.
In the previous quarter, Reliance Industries had reported a revenue of Rs 1,78,328 crore. The company's expenses had come in at Rs 1,59,133 core.
Reliance Industries O2C EBITDA likely to increase by 4 per cent quarter-on-quarter (QoQ) to Rs 13,200 crore on better GRMs, partly offset by weaker petchem margins. Upstream EBITDA would jump 81 per cent QoQ to Rs 1,930 crore on the higher deepwater-HP-HT gas ceiling in H2FY22.
“RIL's overall retail revenues are expected to increase 39% YoY to Rs 52599 crore. On account of judicious cost saving initiatives and positive operating leverage, we expect EBITDA margins to improve 70 bps YoY to 6.8% (excluding other income on investments). Recovery in refining as well as petchem margins is expected to lead to growth of 14.5% QoQ (and 49.3% YoY) in O2C EBITDA to Rs 14569.7 crore.”
“We expect Reliance Industries’ earnings to grow by 10% on-quarter basis led by strong recovery in GRMs, a 4.5% on-quarter rise in ARPUs and a solid recovery in retail business.”
Reliance Industries share price dipped on Friday ahead of Q3 results. After hitting an intraday high of 2501.95, RIL share ended 0.03% per cent down at Rs 2,478.10 on BSE. RIL share has gained 3% so far this year. The stock has risen over 380% in the past five years.
Reliance Retail recently informed that it acquired about 55 per cent stake in India-based robotics firm Addverb Technologies. “Reliance Retail Ventures Limited (RRVL) had acquired approximately 55 per cent stake in Addverb Technologies Private Limited (Addverb) in July 2021,” RIL said in the filing.
Hemang Jani, Head Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services, said that renewed focus on green energy and recent developments pertaining to acquisition and investment announcement into alternate energy have been viewed positively by markets, as Reliance Industries could emerge as a big player in this emerging theme with its balance sheet and execution capabilities.
Reliance’s retail business to display a healthy recovery in Q3FY22 on the back of a buoyant festive season demand and robust store addition pace. Overall retail revenues are expected to increase 39% on-year to Rs 52,599 crore, said ICICI Direct.
According to ICICI Direct research analysts, RIL’s consolidated EBITDA is estimated to grow 40.5% on-year to Rs 30,310.5 crore as all segments are expected to report healthy on-year growth. “We expect Jio to continue to lead subscriber addition with net subscriber addition of 8 mn. The monthly ARPU, like peers, is expected to witness growth, driven by tariff hike, at 4% QoQ at Rs 149. EBITDA (standalone) at Rs 9333 crore, is likely to grow 3.8% QoQ,” it said.
RIL’s earnings are likely to improve sequentially due to improved refining earnings. It added that RIL’s standalone earnings will grow 7 per cent sequentially, given higher refining profitability and higher gas realisation, noted Prabhudas Lilladher analysts. “We factor in stable refining throughput (16.5MTPA, 16.8MT in Q2), given moderate pick up in global demand. Petrochemicals earnings will come off, due to moderation in spreads. Profitability will also improve due to higher gas realization of USD6.82/mmbtu (+USD2.8/mmbtu QoQ),” the brokerage said.
Reliance Industries is likely to report 55.1% on-year growth in revenues to Rs 1,82,827 crore, driven by growth in O2C. Its consolidated EBITDA could increase by 13.3% on-year to Rs 29,975 crore. Net profit growth could increase by 15.2% on-year to Rs 15,224 crore in Q3FY22.
~ HDFC Securities