Reliance Industries Q4 Results: Profit Jumps 19.8% Beating Estimates On Higher Margin

Reliance Industries Ltd.'s fourth-quarter profit rose on higher operating margins beating analyst estimates on the back of strong performance of its consumer-facing businesses.

The Mukesh Ambani-led conglomerate’s consolidated net profit for the period rose 19.8% sequentially to Rs 21,327 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 16,442-crore consensus estimate of analysts tracked by Bloomberg.

RIL Q4 FY23 Highlights (QoQ)

• Revenue from operations fell 1.91% to Rs 2,16,376 crore against the estimated Rs 2,25,204 crore.

• Operating profit or earnings before interest, taxes and depreciation rose 9% to Rs 38,440 crore as compared with the Rs 36,915.3-crore forecast.

• Operating margin stood at 17.76% versus 15.9%, as of December.  

“With steady growth in mobility and FTTH subscriber base and an expanding bouquet of content and digital services, the Jio business continues to deliver impressive growth in operating profits,” Mukesh Ambani, chairman and managing director of Reliance Industries, said in the statement.

Retail business registered excellent growth numbers backed by expansion of physical and digital footprint and a significant increase in footfall, he said. "We continue to expand our product base across consumption baskets, ensuring our customers get world-class products at affordable prices.”

Oil-to-chemicals posted its highest-ever operating profit despite global uncertainties and disruptions in commodity trade flows, Ambani said. "Our oil and gas segment also delivered very strong growth and is now poised to contribute nearly 30% of India’s domestic gas production. This year, we have proposed to demerge our financial services arm and list the new entity 'Jio Financial Services Ltd'."

Revenues for Q4 FY23 fell by 11.8% YoY to Rs 1,28,633 crore, primarily on account of sharp reduction in crude oil prices and lower price realisation of downstream products.

However, the operating profit for the segment improved by 14.4% YoY to Rs 16,293 crore for the period. The operating margin was at 12.7%, an increase of 290 bps YoY led by strength in transportation fuel cracks, optimized feedstock cost and advantageous ethane-cracking economics, the company said.

This was partially offset by lower polyester chain margins. Special additional excise duty on transportation fuels adversely impacted earnings by Rs 711 crore.

Segment revenue for the fourth quarter more than doubled as compared with a year ago, mainly on account of higher price realisation and 13% year-on-year increase in KGD6 gas production.

The average price realised for KGD6 is $11.39 per million metric British thermal unit in Q4 FY23 versus $6.13 per mmBtu in Q4 FY22. The average price realised for CBM was $19.57 per mmBtu versus $7.638 per mmBtu a year ago.

Operating profit for Q4 FY23 increased sharply to Rs 3,801 crore, which is up almost 2.5 times on a year-on-year basis. Operating margin was at 83.4% for Q4 FY23, up 60 basis points as compared with the year-ago period.

Testing and commissioning is underway in the MJ field, the management said in a conference call. It is likely to commission 12 mmscmd in calendar year 2023.

The e-auction for 6 mmscmd of gas is complete, and the Gas Supply Purchase Agreement with the successful bidders is under way.

At peak capacity of 30 mmscmd, KGD6 will contribute 30% of India's production, it said.

Fourth quarter revenue from operations increased to Rs 25,465 crore, as compared with Rs 22,261 crore, primarily driven by sustained increase in subscriber base for the connectivity business, the company said in a statement.

Strong Ebitda growth was led by higher revenue and increase in margins. Depreciation increased due to higher network utilisation and incremental addition to gross block. Finance cost was lower due to prepayment of high cost deferred payment liabilities in Q4 FY22

Jio’s net subscriber addition was 29.2 million for FY23, with monthly churn remaining stable at around 2%. ARPU or average revenue per user increased 6.7% YoY due to impact of tariff hike, better subscriber mix and data add-ons within select customer cohorts.

The ARPU in Q4 FY23 was at an all-time high of Rs 178.8.

Shares of Reliance Industries ended 0.14% higher on Friday as compared with an almost unchanged benchmark Sensex.