Net profit came in at ₹19,443 crore, missing Street estimates on higher taxes and lower-than-anticipated discounts on crude oil sourcing. A Bloomberg survey of analysts estimated
to post net profit in excess of ₹22,000 crore. Last year in the April-June quarter, Reliance had reported a net profit of ₹13,806 crore.
Revenue for the quarter came in at ₹2.23 lakh crore, up 54.5% from a year ago. Consolidated Ebitda, or operating profit, came in at ₹40,179 crore, up 45.8% on-year.
The company’s shares climbed 0.62% to ₹2,502.90 apiece on the BSE Friday. The benchmark Sensex closed 0.70% higher. Earnings were announced after the close of trading in Mumbai.
Stellar O2C Performance
“Geopolitical conflict has caused significant dislocation in energy markets and disrupted traditional trade flows. This, along with resurgent demand, has resulted in tighter fuel markets and improved product margins,” said Mukesh Ambani, chairman, Reliance Industries, adding that despite significant challenges posed by the tight crude markets and higher energy and freight costs, the company’s oil-to-chemicals (O2C) business has delivered its best performance ever. The O2C segment revenues expanded 56.7% on-year to Rs 161,715 crore, primarily on account of higher crude oil and product prices. Segment Ebitda improved 62.6% on-year to Rs 19,888 crore. Benchmark Brent crude average prices were up 65% on year to $113.9 per barrel.
Although Reliance does not reveal its gross refining margins, the Asian refining margin benchmark averaged $21.35 a barrel during the June quarter. The flagship refining business has been making a windfall from the war in Ukraine this year as it secured cheaper Russian oil avoided by Western buyers and stepped up exports to benefit from higher fuel prices. The company gained from a spike in fuel cracks due to supply disruptions in Europe, but was impacted by higher energy costs and oil prices, joint chief financial officer V. Srikanth said during an earnings call. On July 1, the government imposed a tax on fuel exports and crude oil production to tap windfall gains from surging prices but reduced it this week. The impact of this policy move will be seen in the September quarter. Higher gas price realisation in KG D6 and CBM (coal-bed methane) supported revenues for the exploration and production segment, which nearly trebled on-year to Rs 3,625 crore. Segment Ebitda increased to Rs 2,737 crore.
KGD6 gas production (Reliance’s share) during the quarter was at 40.6 BCF (billion cubic feet) against 33.1 BCF a year ago. During the quarter, average gas price realized for KGD6 was at $9.72 per MMBTU (million metric British thermal unit) against $3.62/MMBTU a year ago.
Consumer Businesses
Jio Platforms Ltd. (JPL) posted a 24% on-year rise in net profit at Rs 4,530 crore on gross revenue of Rs 27,527 crore, up 24%, driven by residual impact of tariff increases in its telecom business and acceleration in home broadband connections. Jio added 9.7 million users, taking its subscriber base to 419.9 million by the end of the quarter. The average revenue per user of JPL’s telecom unit, Reliance Jio Infocomm, expanded 4.8% sequentially to Rs 175.7.
The telco is poised for the 5G auctions starting later this month and has already submitted the biggest earnest money deposit of Rs 14,000 crore ( $1.8 billion), indicating its ambition to dominate the auctions. The company has already undertaken field trials, said Reliance Jio president Kiran Thomas.
