Reliance Industries consolidated net profit in the June quarter fell 10.8 per cent year-on-year to ₹16,011 crore, weighed down by its dominant oil-to-chemicals business. The revenue at 2.1 lakh crore was down 5.3 per cent year-on-year.

Both net profit and revenue were also down sequentially. The numbers were below street estimates that had forecast net profit at ₹16,509 crore and revenue at ₹2.15 lakh crore.

The company’s EBITDA, at ₹41,982 crore, however, rose 5.1 per cent due to the consumer and the upstream businesses that offset the decline in O2C (oil-to-chemical) revenue.

The operating margin for the quarter, as given by the company, was 11.4 per cent, compared to 11.9 per cent a year ago.

The net profit was hit by higher depreciation and finance costs in the quarter. Depreciation rose 31.7 per cent to ₹11,775 crore, while finance costs rose 46 per cent to ₹5,837 crore due to higher loan costs.

O2C business drags profit

The company’s oil-to-chemical (O2C) business, as expected, has been a drag on the results, and during the quarter under review, revenue from the business dipped to ₹1.3 lakh crore from ₹1.6 lakh crore a year ago.

The company said that the O2C business was hit by a 31 per cent fall in crude oil prices, subdued refining margins with supply overhangs, and tepid demand that led to lower price realisation. Officials said that the revenue in the segment was also lower due to a high base effect in the year-ago quarter.

Digital biz

The company’s consumer-facing businesses did offset, to some extent, the negative impact of its O2C business.

Revenue from the retail business, as expected, saw an uptick to ₹69,962 crore from ₹58,560 crore a year ago, though it was flat sequentially. Revenue from its digital services business, at ₹32,077 crore, was also higher than ₹28,512 crore a year ago.

Higher subscriber base and customer engagement led to revenue and profitability growth for its digital services. Retail earnings reflected an expanded footprint and improved profitability with operating leverage.

The company’s capital expenditure during the quarter was ₹39,645 crore.

Commenting on the results, Chairman Mukesh Ambani said that Reliance Jio’s wide range of offerings at affordable price points had led to strong growth in the subscriber base and the strong financial performance of the digital services business.

“The contribution of digital and new commerce initiatives is scaling up, delivering value to consumers, and providing synergistic benefits to merchant partners,” he said.

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