Reliance Industries Limited (RIL) is an Indian multinational conglomerate company headquartered in Mumbai, Maharashtra, India. It operates in multiple industries, including refining and petrochemicals, oil and gas exploration and production, retail, telecommunications, and media. The company is a diversified conglomerate with a significant presence in India and a growing global footprint. Its focus on innovation, customer satisfaction, and sustainability has helped the company become a leader in multiple industries and continues to drive its growth and success.
Result Analysis: Reliance Industries Limited (CMP: Rs.2536.20)
Result Update: Q1FY24
|Market Cap. (Cr.)||1715893|
|52 Wk. high/low||2632 / 1979|
|Book Value (Rs)||1213.72|
Reliance Industries reported a decline in revenue of 5.3% YoY majorly on account of an 18% YoY fall in O2C revenue owing to a correction in crude prices offset by 28% YoY & 2% QoQ higher Oil & Gas revenue, led by increasing production, 13% YoY & 2% higher Digital services revenue, driven by steady subscriber addition, and 19% YoY & 1% QoQ higher Retail revenue.
The company reported a record EBITDA of Rs.38,093cr., was unaltered owing to a 150 basis point increase in JPL margins YoY, a 34% increase in retail Ebitda, and a YoY significant decline in fuel cracks that was offset by a strong contribution from oil and gas on greater volume. EBITDA margin increased by 110 bps on YoY basis.
PAT was lower by 14% QoQ and 5% YoY basis due to high finance cost, depreciation, and transition to new tax regime.
Although Capex declined 10% QoQ, it is anticipated to accelerate as more retail stores are added and 5G networks are deployed across India by December 23. Since short-term loans were taken out because internal cash flow was inadequate to pay for capital expenditures, net debt increased by 1% QoQ.
EBITDA for digital services was Rs 13,720cr. (+17% YoY; +2% QoQ), ARPU increased to 180.5, and there was a net gain of 9.2 million subscribers, bringing the total to 448.5 million.
JFSL: Rs 155bn of Cash and Liquid Investments transferred from RIL, taking the liquid assets of JFSL to Rs 207bn.
Reliance Jio reported a strong set of numbers; with an annual increase of 6.7% in ARPU, which currently stands at Rs.178.8. The total customer base also grew by 7.09% YoY to 43.93 crore.
Commenting on the June quarter results, Mukesh D Ambani, CEO and MD said, “Reliance’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. Jio’s wide range of quality offerings at affordable price points has enabled strong growth in its subscriber base, which reflects in the financial performance of the digital services business. Accelerated roll-out of Jio’s True 5G services is propelling the nation’s digital transformation at an unprecedented pace. Retail business delivered robust growth, with fast-paced store additions and steady growth in footfalls. O2C business delivered a resilient performance despite continuing global macro headwinds.”
Reliance reported YoY flat EBITDA and ~11% YoY decline in net earnings in Q1FY24, mainly due to the lagging of O2C segment, however the previous several years have seen strong expansion for Reliance Retail. Its footprint and number of stores have grown by 2.3x/53% over FY20-23E, even during Covid. The two digital verticals, AJio and Jiomart, are gaining significant pace; their combined sales share increased from 17% to 18% in the previous quarter, generating an INR 81 billion quarterly run-rate. Considering the growth momentum in Retail, RIL has accelerated a step towards the de-merger. Any announcement regards to potential listing of consumer business would be a key trigger for the RIL.
|Particulars (In Rs. Cr.)||Q1FY24||Q4FY23||Q1FY23||QoQ%||YoY%|
|Revenue from Operations||2,10,831||2,16,265||2,22,664||-2.5%||-5.3%|
|Cost of materials consumed||95,809||1,04,031||1,30,528||-7.9%||-26.6%|
|Purchase of Stock-in-Trade||38,372||37,777||37,043||1.6%||3.6%|
|Changes in inventories||-2,513||-4,706||-20,890||-46.6%||-88.0%|
|EBITDA Margin (%)||18.1%||17.7%||17.0%||40 bps||110 bps|
|Depreciation & Amortisation expense||11,775||11,452||8,942||2.8%||31.7%|
|Profit Before Tax (PBT)||24,294||23,960||27,055||1.4%||-10.2%|
|Profit After Tax (PAT)||18,258||21,227||19,405||-14.0%||-5.9%|
|PAT Margin (%)||8.7%||9.8%||8.7%||-110 bps||0 bps|
|EPS (in Rs.)||23.66||28.52||26.54||-17.0%||-10.9%|
|Segment Revenue (In Rs. Cr.)||Q1FY24||Revenue %||Q4FY24||QoQ%||Q1FY23||YoY%|
|Oil to Chemicals (O2C)||1,33,031||51.7%||1,28,634||3.42%||1,61,715||-17.74%|
|Oil and Gas||4,632||1.8%||4,556||1.67%||3,625||27.78%|
Source: Company website, EWL Research
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