Reliance reports Q1 net profit at Rs 16,011 cr as consumer businesses continue to shine

- Reliance has declared a dividend of Rs 9/share.
- The oil and gas margins are at a record high at 87% vs 76% (YoY).
- Operating margins for the retail business jumped 30 basis points year on year.

Reliance Industries, the company with the second-biggest weightage on the Nifty 50 index, reported a net profit of Rs 16,011 crore for the quarter ended 30 June 2023. The oil to retail giant had reported a net profit of Rs 19,299 crore in the same period last year. During the quarter, finance cost rose 46% to ₹5837 crore. This trend is an ongoing one as debt has risen by 21% to ₹3.19 lakh crore.

The star of the quarter has been the consumer businesses of Reliance. The O2C business was expected to show weakness during the quarter but the decline was less than what the street had anticipated. During the quarter RIL’s revenues came in at ₹2.08 lakh crore against ₹2.19 lakh crore in the corresponding quarter last year.

Mukesh Ambani, chairman and managing director of Reliance Industries, said: “RIL’s strong operating and financial performance this quarter demonstrates the resilience of our diversified portfolio of businesses that cater to demand across industrial and consumer segments. Retail business delivered robust growth, with fast paced store additions and steady growth in footfalls.

The Mukesh Ambani owned conglomerate has had a better than expected quarter with the telecom business going steady and the retail business scoring better than what the street expected. The refining business has come under pressure, as was expected by analysts.

Reliance Retail posted revenues of ₹62,159 crore against ₹51,582 crore in the corresponding quarter last year. The retail business reported a post tax profit of ₹2448 crore during the quarter against ₹2061 crore in the year ago period. Operating margins for the retail business jumped 30 basis points year on year to 7.9% in the June quarter of the current fiscal.

The EBIDTA of retail business went up 33.9% to 5,139 crore from 3,837 crore in the same quarter last year. However, its finance costs swelled 130% YoY to 628 crore. “Higher finance cost on account of increase in borrowings for business expansion,” the company said in a press release.

The company said that it opened 555 new stores during the quarter. Its depreciation also went up by 56.9% on an annual basis, and the company attributed it to a higher asset base on account of addition of new stores and supply chain infrastructure.

“I am delighted to share that our financial performance in the quarter has been resilient and aligned with our business goals. The sustained growth across consumption baskets has further consolidated our position as a market leader,” said Isha M Ambani, Executive Director, Reliance Retail Ventures.



Source: BSE


The O2C business has been impacted by 60-70% decline in fuel cracks with energy market dislocation a year ago. The EBITDA (Earnings before interest, taxes, depreciation) from the O2C segment has come in at Rs 15,271 crore, down 23.2% when compared to the March quarter.

Strong contributions from consumer and upstream businesses offset the decline in O2C. The Oil & Gas EBITDA has come in at Rs 4,015 crore.

A reading of the company’s first quarter update shows that the dip in Reliance's refining business was expected due to a decline in cracks, which is the difference between crude oil and the prices of the wholesale petroleum products that derive from it, such as petrol, kerosene etc. It is noteworthy that Singapore GRMs are down 51% from the March quarter to $4 per barrel.

The Reliance stock closed 2.4% in the red today but was still up 2.3% in the week. The stock has been trading close to its all-time high and has recovered nearly 30 percent from its March 2023 lows. On July 20, Reliance's financial unit, Jio Financial Services Ltd or JFSL, demerged from its parent body. The JFSL stock was priced at Rs 261.85 which in turn means that the entire share capital of JFSL is valued at Rs 1,72,000 crore or over USD 21 billion. This is more than the analysts' expectations of Rs 160 to Rs 190 per share.

ALSO READ: Reliance Jio’s Q1 PAT rises 3% QoQ, higher costs pinch


What was expected

The street expected the conglomerate to report a muted quarter with a decline in the refining business. "RIL is likely to see a sharp decline in its OTC segment earnings, with an estimated US$3.6/bbl QoQ dip in GRMs offset somewhat by a small improvement in integrated petrochemical spreads (helped by softer gas/ethane costs)," said ICICI Securities.

"Overall, we expect RIL’s consolidated EBITDA to decline 3% QoQ and PAT 14% QoQ due to higher depreciation, interest costs and tax driving the higher decline in PAT vs EBITDA for the quarter." the report adds.