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The quarterly results of Reliance Industries Limited were announced late on 23rd July 2021. The megacorp declared consolidated net profits of Rs 12,273 crore, a fall of 7% from the Rs 13,233 crore reported in the first quarter of the last financial year. However, last June saw an exceptional gain of Rs 4,966 crore; This will mean a 48.4% growth in adjusted profit after tax (PAT) over last year’s Rs 8,267 crore.

Revenue from operations for RIL rose 58.2% to Rs 1.44 lakh crore on a year-on-year (y-o-y) basis. The figure stood at Rs 91,238 crore in the same quarter last year. 

The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA), on a consolidated basis, grew 27.6% y-o-y to Rs 27,550 crore. The company attributed this growth to increased revenue earnings from Fashion & Lifestyle and Consumer Electronic verticals. Moreover, better cost management and an enhanced investment income of Rs 551 crore further boosted the growth in the EBITDA.

Jio Platforms reported a 45% y-o-y growth in consolidated net profit at Rs 3,651 crore Q1 FY2022 compared with Rs 2,519 crore in the same period last year.

Before the results were declared, the stock of RIL closed at Rs 2,105, lower by 0.71%. 

Hits

  • Net profit up sequentially by 13% on a y-o-y basis
  • PAT up 48.4% on a y-o-y basis
  • Operating profit saw 58.2% y-o-y growth – from Rs 91,238 crore to Rs 1.44 lakh crore
  • Oil-to-Chemicals (O2C) business saw revenues increase 75.2 % y-o-y to Rs 1.03 lakh crore from Rs 58,906 crore in the last year period
  • Reliance Retail grew its area of operation on a y-o-y basis from 29 million sq. feet to 34.5 million sq. feet
  • Reliance AJIO saw a 4x increase in traffic and orders on its platform
  • Reliance Jio grew its customer base by adding a net of 42.3 million customers
  • Jio’s EBITDA grew by 21.3% on a y-o-y basis to Rs 8,892 crore
  • Jio reported a net profit of Rs 3,651 crore in Q1, a boost of 45% on a y-o-y basis compared to the profit of Rs 2,519 crore last year 
  • Jio’s value of services grew by 9.8% on a y-o-y basis to Rs 22,267 crore

Misses

  • The consolidated net profit fell by 7.25% on a y-o-y basis from Rs 13,233 crore to Rs 12,273 crore
  • Decreased footfall of 46% against 88% on a q-o-q basis

Performance Of Different Segments

Each vertical of the oil-to-telecom conglomerate performed impressively in Q1 FY2022. Here’s a look at how the different verticals of the company performed –

  • Reliance Retail posted profits at Rs 38,563 crores compared to Rs 31,633 crore last year. 123 new stores were added to take the total physical store count to 12,803. Reliance Retail’s quarterly net profit was Rs 962 crore which is on a y-o-y basis. The profit was driven by regional events and attractive promotional offers among other factors.
  • The grocery business grew in double digits.
  • Reliance-backed Netmeds saw a 60% increase in orders on a Q-o-Q basis
  • The O2C business segment posted a y-o-y growth in revenue of 75.2% due to increased product prices. The y-o-y EBITDA increased by 49.8% to reach Rs 12,231 crore due to increased demand for transportation fuel.
  • Reliance Jio, the digital and telecom segment saw 45% growth in consolidated net profit in the quarter to Rs 3,651 crore. The value of services came in 10% higher y-o-y at Rs 22,267 crore and the company made net customer additions of 42.3 million customers on a yearly basis. ARPU for the quarter ended June 2021 was Rs 138.4 per subscriber per month. 

Management Commentary

Commenting on the results, Mukesh Ambani, chief of RIL said: “I am happy that our company has delivered robust growth despite facing a highly challenging operating environment caused by the second wave of the Covid pandemic. The results of the 1Q FY2022 clearly demonstrate the resilience of Reliance’s diversified portfolio of businesses that cater to large parts of the consumption basket.”

What does It mean For Investors?

Despite the COVID situation and the associated restrictions that hampered the operational activity of RIL, the conglomerate delivered profits. Reliance Jio has been on a streak with an increased consumer base and a high-profit margin. RIL is expected to remain the largest company in India by market capitalization. All the verticals of the conglomerate have posted growth figures.

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