Billionaire Mukesh Ambani's Reliance Industries Ltd on Friday, January 21, reported its best-ever quarterly performance in October-December 2021, helped by an uptick in two 'Rs' -- refining and retail, a recent tariff hike accelerating growth at Jio and a one-off gain from the sale of US shale gas business. The oil-to-retail-to-telecom conglomerate's consolidated net profit rose 35.6% sequentially and 41.5% over the year-ago period to Rs 18,549 crore in the quarter ended December 31, 2021, the firm said in a statement.
Consolidated revenue of the nation's biggest company by market value rose 9.5% over the previous three months and 52.2% year-on-year to record Rs 209,823 crore. EBITDA or earnings before interest, tax, depreciation and amortisation climbed 30% to a record Rs 33,886 crore. Three-fourths of this came from its traditional oil business as higher prices and demand returning from the bouncing economy helped earnings.
But the company, which during the pandemic declared itself net debt-free, saw its borrowings exceed cash in the third quarter of the current fiscal. Refinancing liabilities towards telecom spectrum saw its gross debt of Rs 244,708 crore exceeding cash balance of Rs 241,846 crore.
The company had an exceptional gain of Rs 2,872 crore from the sale of shale gas assets.
Festive demand helped retail scale to near pre-COVID levels of earnings. While retail delivered an all-time high revenue and EBITDA, digital services (which includes telecom) saw revenues crossing Rs 25,000 crore and operating profits crossing Rs 10,000 crore.
Consumer businesses contributed Rs 75,000 crore of revenue.
An increase in crude oil prices and higher volumes saw oil-to-chemical (O2C) revenues rise and stabilising of gas production from newer fields in the eastern offshore KG-D6 block returned the oil and gas business segment to profitability.
Reliance's capital expenditure for the quarter ended December 31, 2021, was Rs 27,582 crore.
Reliance operates four business verticals -- O2C business includes its oil refineries, petrochemical plants, and fuel retailing business; retail business that houses brick-and-mortar stores and e-commerce; digital services that cover telecom arm Jio; and new energy business.
Reliance Retail Ventures Ltd's EBITDA rose to Rs 3,822 crore as demand improved across categories during the festive season. Net profit from retail business rose 23.4% to Rs 2,259 crore.
The growth was supported by retail demand in jewellery, electronics and grocery. Also, lower restrictions on mobility and higher operating days during the quarter were other drivers of the retail segment's sales.
It opened 837 new stores during the quarter, taking the total count to 14,412 stores. Revenue crossed the Rs 50,000 crore mark for the first time, rising above pre-pandemic levels.
O2C segment's operating profit rose sequentially for the sixth straight quarter, aided by improved refining margins and prices. EBITDA at Rs 13,530 crore was up 6.3% quarter-on-quarter and 38.7% year-on-year.
Inventory gains and recovery in petrol, diesel and jet fuel spreads aided refining margin in the third quarter.
Gas production provided a tailwind to earnings despite hiccups in chemicals.
Reliance's oil and gas segment posted a near 500% YoY spurt in revenues to Rs 2,559 crore, with segment EBITDA of Rs 2,033 crore. This was on the back of production from newer fields in the KG-D6 block stabilising, taking the overall production to 18 million standard cubic metres per day.
Jio Platforms -- the digital arm -- reported an 8.8% higher net profit at Rs 3,795 crore as the telecom segment's average revenue per user rose to Rs 151.60 per month from Rs 143.6 in the previous quarter and Rs 151 in October-December 2020.
Jio's subscriber base grew, helped by its budget smartphone Jiophone Next. It added 10.2 million subscribers in Q3FY22 but its total subscriber base at 421 million was 8.4 million less than the previous quarter, mainly driven by SIM consolidation.
Segment EBIDTA crossed Rs 10,000 crore mark for the first time.
But the full impact of the recent tariff hike will be visible in the fourth quarter (January-March).
Commenting on the results, Mukesh D Ambani, chairman and managing director, Reliance Industries Ltd, said the company has posted its best-ever quarterly performance in 3Q FY22 with a strong contribution from all businesses.
"Both our consumer businesses, retail and digital services have recorded highest ever revenues and EBITDA. During this quarter, we continued to focus on strategic investments and partnerships across our businesses to drive future growth," he said.
Retail business activity has normalised with strong growth in key consumption baskets on the back of the festive season and as lockdowns eased across the country. Digital services business has delivered broad-based, sustainable, and profitable growth through improved customer engagement and subscriber mix, he said.
"The recovery in global oil and energy markets supported strong fuel margins and helped our O2C business deliver robust earnings. Our Oil & Gas segment delivered strong growth in EBITDA with volume growth and improved realization."
Ambani said Reliance was making steady progress towards achieving the vision of Net Carbon Zero by 2035.
"Our recent partnerships and investments in technology leaders in the solar and green energy space is illustrative of our commitment to partner India and the World in the transition to clean and green energy. We continue to pursue growth initiatives and collaborate with global leaders who share our vision of a sustainable future for our planet," he noted.
In recent months, Reliance has pivoted its clean energy business through acquisitions that will give it the technology and expertise to make solar equipment and energy storage system.