Billionaire Mukesh Ambani's Reliance Industries on Friday reported a 46 per cent jump in its June quarter net profit on bumper earnings from oil refining as well as an uptick in telecom and retail businesses.
The oil-to-retail-to-telecom conglomerate's consolidated net profit stood at Rs 17,955 crore, or Rs 26.54 a share, in April-June compared to Rs 12,273 crore, or Rs 18.96 per share, a year back, the firm said in a statement.
Sequentially, net profit was up 11 per cent but lagged analyst estimates who had factored that the company would have captured the biggest discount available on Russian crude and exported all fuel when margins peaked.
Barring January-March, the net profit had risen in the previous six quarters (starting July-September 2021).
Reliance posted a record quarterly consolidated EBITDA at Rs 40,179 crore, up 45.8 per cent year-on-year.
Of the Rs 12,629 crore increase in EBITDA (earnings before interest, taxes, depreciation and amortisation), 76 per cent or Rs 9,597 crore came from oil refining and gas production.
With energy prices surging to an all-time high post Russia's invasion of Ukraine, Reliance reaped exceptional but not super-normal earnings from its oil-to-chemicals business.
The 62.6 per cent rise in segment earnings was driven by the record refining margins despite soft petchem.
Cracks or margins on diesel and petrol exported too were at an all-time high.
Its export earnings soared 71.3 per cent to Rs 96,212 crore.
While the company has stopped disclosing refining margins, analysts estimate it to be $22-26 per barrel in April-June compared to $12 in the previous quarter.
Oil business earnings were dented by losses on the fuel marketing segment incurred as it tried to match bigger PSU rivals, who sold petrol and diesel at below cost.
Also, its earnings from gas production got a boost with a big price increase, as pre-tax profit surged over three-fold to Rs 2,737 crore.
Besides oil, the residual impact of tariff hike in Jio, and positive operating level in retail with footfall returning to pre-Covid levels boosted EBIDTA to record levels.
Reliance Jio Infocomm, the nation's largest telecom operator by subscribers, posted a 24 per cent rise in net profit to Rs 4,530 crore on the back of an uptick in per user revenue (Rs 175.7 per user per month) and 9.7 million subscriber addition.
Retail continued to witness recovery.
The net profit for the segment doubled to Rs 2,061 crore.
It opened 792 new stores to take the spread to 15,866 outlets with an area of 45.5 million sq ft covering all corners of the country.
The retail business posted record revenues and EBIDTA on normalised store operations and higher footfalls.
Prospects for the next nine months of course stand impacted by the estimated $8 per barrel hit from the higher duties imposed on fuel the firm exported.
The earnings in Q1 were below some estimates by some analysts who made assumptions about the company getting Russian crude oil for processing at its Jamnagar refineries in Gujarat at a $0 per barrel discount and it exporting all of the petrol and diesel during a limited window when product cracks were as high as $48 per barrel.
Consolidated revenue of the nation's biggest company by market value rose 53 per cent year-on-year to Rs 2,42,982 crore in the first quarter of FY23.
Commenting on the results, Mukesh D Ambani, chairman and managing director, Reliance Industries Limited, said: "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.
"Despite significant challenges posed by the tight crude markets and higher energy and freight costs, O2C business has delivered its best performance ever."
In the retail business, Reliance continues to focus on enhancing consumer touch-points while customer engagement on its digital services platform remains high.
"Jio is working towards expanding data availability for all Indians and I am pleased to see the positive trends in mobility and FTTH subscriber additions."
"Reliance is committed to invest in India's energy security.
"Our new energy business is forging partnerships with technology leaders in solar, energy storage solutions and the hydrogen eco-system.
"These partnerships will help us realise the vision of clean, green and affordable energy solutions for all Indians," he added.
The Russian-Ukraine conflict accelerated an already tight demand-supply situation for crude oil-petroleum products, leading to higher cracks or margins on petrol and diesel.
The performance of the oil-to-chemical business was tempered by the weakness in margins of the petrochemical division because of higher crude oil prices as well as declining international margins for key products.
But the company, which during the pandemic declared itself net debt-free, saw its borrowings (Rs 263,382 crore) exceed cash (Rs 205,727 crore) in the first quarter of the current fiscal.
Reliance operates four business verticals -- O2C business includes its oil refineries, petrochemical plants, and fuel retailing business; a retail business that houses brick-and-mortar stores and e-commerce; digital services that cover telecom arm Jio; and new energy business.
O2C segment's operating profit rose sequentially for the eighth straight quarter, aided by improved refining margins and prices.
Retail witnessed its first quarter without any operating disruptions since the onset of Covid and footfalls surpassed pre-COVID levels.
Reliance Retail crossed a milestone of 200 million registered customers.
