Reliance Industries first Indian company to near $100 billion in revenue – profit remains under stress due to weaker petrochem margins

• While the Mukesh Ambani-led Reliance Industries reported lower than expected net profit and revenue for the March quarter, profitability fell for the first time in FY22.
• The oil-to-retail and now digital conglomerate reported a net profit of ₹18,000 crore with revenue of ₹2.11 lakh crore in the March quarter.
• The company has planned a dividend of ₹8 per share for the financial year ending March 2022.

The Mukesh Ambani-led Reliance Industries has weathered the impact of geopolitical tensions — specifically, the Russia-Ukraine war and prior to that, the COVID-19 pandemic, but its impact is visible on the company’s bottomline.

The oil-to-telecom conglomerate company owned by Mukesh Ambani reported a weaker than expected net profit and also reported a fall in profitability for the first time in FY22.

It posted net profit of ₹18,000 crore with a revenue of ₹2.11 lakh crore in the March quarter – this is a decline of 12.25% in profit sequentially, while revenue is up 10.77%. Analysts expected a growth of 4.7% in profit and 14.5% in revenue.

Some of the impact is because of weak margins in its strongest suit – the oil-to-chemicals and gas segments. This was not a complete surprise as analysts had expected weaker margins in the petrochemicals business because of higher crude oil prices.
The company in its March quarter earnings reported that downstream product margins in oil-to-chemicals were impacted by weak naphtha cracking economics and supply overhang in fibre intermediates.

Also, petrochemicals and oil to gas segments reported a fall in EBITDA margin.
On the flip side, Reliance Industries is now the first Indian company to near $100 billion revenue as its revenue grew almost 50% to ₹7.21 trillion (93.78 billion) in FY22.

In other segments, like Reliance Jio and Reliance Retail, the company reported strong performance. Reliance Jio posted 14% growth in its net profit between January and March 2022 – this is Jio’s strongest profit growth in five quarters, but it is still below analyst expectations of ₹5,000 crore quarterly profit.

The company has also declared a dividend of ₹8 per share for the financial year ending March 31, 2022.

“I am particularly happy with the progress our Company is making in the New Energy and New Materials business. We are forging ahead with the development of our New Energy Giga Factories complex across 5,000 acres in Jamnagar,” said Mukesh D. Ambani, chairman and managing director at Reliance Industries.

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