How RIL's Oil-To-Chemical, Oil And Gas Segments Fueled Growth In Q2
Reliance Industries sees a constructive global environment for its integrated O2C model, it said.
Reliance Industries Ltd.'s revenue from operations rose in the second quarter of fiscal 2024, with the oil-to-chemicals segment contributing 52.19% of the gross value of sales and services, while the oil and gas segment accounted for 2.33%.
Revenue from operations was up 11.44% quarter-on-quarter to Rs 2,34,956 crore in the quarter ended September, in line with Bloomberg analyst estimates.
Segmentwise Performance: Oil-To-Chemicals
The O2C segment saw a slight 0.6% sequential sales dip but a 5.6% YoY increase to 17.1 million metric tonnes in volume. Robust domestic demand and a tight fuel market boosted segment performance in Q2. Higher transportation fuel profit and a 23% rise in PVC margin drove Ebitda growth for the quarter, RIL said in its investor presentation.
The year-on-year performance was sustained by a 47% gasoline margin increase and a 7% PVC margin improvement. Feedstock sourcing and domestic demand further facilitated growth.
Sequentially, the throughput for feedstock rose 1.5% to 20 million metric tonnes in Q2 from 19.7 MMT in the previous quarter.
Total production meant for sale fell 0.58% QoQ, as the volume produced for sale purposes remained fairly stable across products. Production for polymers rose 7.14% QoQ, while production for chemical sales fell 6.25% QoQ.
Reliance Industries sees a constructive global environment for its integrated O2C model, it said. The company expects strong global oil demand growth, led by transportation fuels, and 2023 demand to average 101.8 million barrels per day, according to the presentation.
The right refining system is also expected to keep margins above mid-cycle levels, and planned or unplanned refinery shutdowns will help the refinery segment amid soft demand growth.
RIL has an edge over competitors, as over 85% of its polymer and polyester products are placed in the domestic market, where demand is expected to remain robust.
Segmentwise Performance: Oil And Gas
A successful ramp-up of the MJ field in a stable pricing environment drove Ebitda growth this quarter, while a 66% uplift in volume aided profitability.
Ebitda margin, which stood at 72% this quarter, declined on the back of costs related to the MJ field commissioning and ramp-up and the decommissioning of the company's Tapti field.
RIL's production share in the KG D6 offshore block rose 65.8% YoY to Rs 68.3 crore this year, while its production share in coal bed methane fell 12.5% YoY to Rs 2.1 crore.
Current oil production levels at KG D6 stand at 23,000 barrels of crude oil. Gas production stands at 29 million metric standard cubic metres per day. The average gas production at KG D6 stood at 24.6 MMSCMD in H1 FY24, as compared with 20.2 MMSCMD in FY23.
The company expects global supply uncertainties to keep gas prices firm in the near term. It also expects resilient growth in Indian gas demand, supported by new city gas distribution infrastructure and pipeline connectivity.
The ceiling price of $9.96 per metric million British thermal unit available for KG D6 in H1 FY24 and the increase in the block's domestic gas production will aid future growth, it said.
Shares of Reliance Industries closed 1.91% higher at Rs 2,309 apiece, as compared with the 0.49% rise in the Nifty 50 on Monday.
