RIL’s Q4 net profit of ₹19,299 crore beats analyst expectations, driven by retail

• Oil-to-data giant Reliance Industries reported a net profit of ₹19,299 crore in Q4, and ₹66,702 crore for the full FY23, beating analyst expectations.
  
• The oil-to-chemical segment, Reliance’s bread and butter, remained under stress due to a moderation of crude oil prices in Q4, the company said.
  
• The O2C segment’s revenue continued to decline as a percentage of the total revenue, falling sharply to 59.4% in Q4 from 65.6% in Q3.
  
• The retail segment drove Reliance’ growth during the March quarter, with a topline growth of 21
  

Mukesh Ambani-led Reliance Industries on Friday reported a net profit of ₹66,702 crore for the full FY23, registering an increase of 9.9% when compared to the previous year, while its revenue stood at ₹8.93 lakh crore, which is a growth of 23.7% during the same period. Its Q4 net profit came in at ₹19,299 crore, its highest ever, beating analyst estimates.

As expected, Reliance’s performance during the quarter was led by the retail and telecom businesses, while the oil-to-chemical segment remained weak due to a moderation in crude oil prices and margin pressures during the quarter.

The company’s total revenue in Q4 stood at ₹2.16 lakh crore, up 2% YoY, again beating analyst estimates.

On a sequential basis, the Q4 revenue declined 1.9%, while net profit increased 22%.

Finance costs continue to put pressure on the company’s overall performance, with an increase of 64% YoY to ₹5,819 crore – something that a previous Business Insider India report highlighted could soon become a problem for high-debt companies.

Depreciation rose 43% YoY to ₹11,456 crore due to higher utilisation of assets in the digital services business as well as an expanded asset base.

O2C business remains under pressure

Reliance’s bread and butter, the oil-to-chemicals (O2C) business continued to remain under pressure in Q4, too. The O2C segment’s revenue fell 11.8% YoY to ₹1.29 lakh crore.

“Revenue for Q4 FY23 reduced primarily on account of sharp reduction in crude oil prices and lower price realisation of downstream products,” the company said in its exchange filing.

The O2C segment’s contribution to Reliance’s overall revenue also declined sharply to 59.4% in Q4, from 65.6% in Q3, 68.5% in Q2, and 72% in Q1. On a full year basis, the O2C segment’s revenue as a share of the total revenue stood at 66.6% in FY23, down from 69.4% in FY22.

However, the O2C segment’s earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 14.4% due to optimisations in feedstock cost and transportation fuel cracks.

Also weighing on the O2C EBITDA was special additional excise duty, which accounted for ₹711 crore during Q4.

Reliance Industries’ FY23 and Q4 FY23 in numbers:


Source: Company reports

Retail outperforms other segments once again

Reliance’s retail segment continued to outshine other segments of the company yet again. The retail segment reported a 21.1% YoY growth in revenue to ₹69,267 crore, while its segment net profit grew 12.9%. Overall, its EBITDA during Q4 stood at ₹4,769 crore.

For the full FY23, the retail segment’s revenue stood at ₹2.3 lakh crore, growing by 32%, while the segment net profit grew by 30% to ₹9,181 crore.

“Our focus on customer-centricity backed by investments in technology, innovation and new business segments have helped us create operational excellence and steer the transformation of India’s retail sector,” said Isha M Ambani, executive director, Reliance Retail Ventures.

Reliance also announced that the retail segment’s area of operation has increased to 65.6 million square feet, up from 41.6 million square feet last year. The company’s total operational stores stood at 18,040 at the end of FY23.

Overall, Reliance recorded total footfalls of 219 million during the March quarter across all formats and geographies, its highest ever for the second consecutive quarter. On a YoY basis, the footfalls increased 41.3%.

On a full year basis, its footfalls stood at 780 million in FY23, up from 520 million in FY22.

Through the financial year, Reliance Retail launched multiple new consumer-facing brands, including ‘Independence’, ‘Campa’, among others.

Its digital efforts via JioMart also witnessed a ramp up during the quarter, with the overall catalogue increasing 34% on a sequential basis, while its seller base increased 56% during this period.

Jio’s profit increases marginally despite healthy subscriber additions

The company’s telecom arm, Reliance Jio posted a modest 1.7% sequential increase in its net profit to ₹4,716 crore after a moderate December quarter, in line with analyst expectations. It added 6.4 million new subscribers to its network, taking the total to 439.3 million subscribers.

Its average revenue per user increased marginally to ₹178.8, from ₹178.2 in Q3.

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