Reliance Industries (RIL), India’s diversified conglomerate, recently reported its Q1FY24 financial results, which showcased a mixed performance across its diverse business segments. While the oil-to-chemicals (O2C) business faced challenges due to macroeconomic factors, the telecom and retail sectors exhibited strong growth and resilience. RIL’s Chairman and Managing Director, Mukesh D. Ambani, highlighted the company’s ability to cater to demand across industrial and consumer segments, demonstrating the strength of its diversified portfolio.
Let us understand the key highlights from RIL’s Q1FY24 scorecard, analyzing the company’s consolidated numbers, the performance of its major business segments, and the prospects for future growth –
Key Consolidated Numbers
RIL’s Q1FY24 revenue and profit experienced a year-on-year (YoY) decline, primarily due to the weaker performance of the O2C business. The company’s consolidated gross revenue fell by 4.7% YoY to ₹2,31,132 crore. The decrease in gross revenue was mainly attributed to a significant decline in O2C revenues, influenced by a 31% fall in crude oil prices. Nonetheless, RIL offset these losses to some extent through continued growth in consumer businesses and increased volumes in the O2C and oil and gas sectors.
Profit after tax (PAT), excluding financial services, reached ₹18,258 crore, reflecting a 5.9% YoY decrease due to higher finance costs and increased depreciation. However, the company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) for Q1FY24 increased by 5.1% YoY to ₹41,982 crore. The increase in earnings was mainly due to the consumer and upstream businesses. It has assisted in offsetting the decrease in O2C earnings caused by a significant drop in fuel cracks, which were exceptionally high in Q1FY23.
Oil-to-Chemicals (O2C) – Thriving Amid Difficulties
During the first quarter of the financial year 2024, Reliance Industries Limited’s O2C division encountered obstacles such as destocking due to concerns about an economic recession, higher interest rates, and slower growth than anticipated in the Chinese markets. Furthermore, the year-over-year comparison was affected by abnormally high fuel cracks in the first quarter of the financial year 2023, which caused an unevenness in the energy markets. In Q1FY24, RIL’s O2C segment faced challenges such as destocking due to recessionary concerns, increased interest rates, and slower-than-expected growth in Chinese markets. Additionally, the YoY comparison was impacted by the abnormally high fuel cracks in Q1FY23, creating an imbalance in the energy markets.
Despite these challenges, the O2C segment demonstrated resilience and delivered a credible performance. The revenue for Q1FY24 declined by 17.7% YoY to ₹1,33,031 crore ($16.2 billion). EBITDA also reduced by 23.2% YoY to ₹15,271 crores ($1.9 billion), mainly driven by a fall in transportation fuel cracks and lower downstream chemical margins.
Notwithstanding the short-term difficulties, RIL continued its commitment to energy transition and environmental sustainability by launching Compressed Biogas at Jamnagar. Moreover, Jio-bp spearheaded the Indian electric vehicle (EV) growth story with its 2300+ live charging points and demand aggregators and OEMs in 7 states.
Oil & Gas (Exploration & Production) – Steadfast Growth
The oil and gas segment exhibited robust performance in Q1FY24, with revenue rising by 27.8% YoY to ₹4,632 crore. Revenue rose due to higher gas prices and increased volumes from KG D6 fields, driven by new oil and condensate production from MJ fields.
The segment’s EBITDA increased by 46.7% YoY to ₹4,015 crore, and the EBITDA margin stood at an impressive 86.7%, up nearly 120 basis points compared to Q1FY23. This remarkable performance indicates the segment’s strong potential and positive outlook.
Jio Platforms – Leading the Way
Reliance Jio remained a significant player in India’s telecom industry, leading in net subscriber additions during Q1FY24 with 9.2 million new subscribers. The monthly churn rate also decreased to 1.8% during the quarter, showcasing the company’s ability to retain customers.
The customer base grew by 6.8% YoY to 44.85 crores, and the average revenue per user (ARPU) increased by 2.8% YoY to ₹180.5. The growth in ARPU can be attributed to a better subscriber mix and the expansion of the wireline business.
Jio’s gross revenue for the quarter rose by 11.3% YoY to ₹30,640 crore, and net profit increased by 12.5% YoY to ₹5,098 crore. EBITDA for Jio Platforms reached ₹13,116 crore, indicating a solid 14.8% YoY growth. The exponential 28.3% YoY increase in data usage was a testament to the success of Jio’s 5G adoption and the ramp-up of Fiber-to-the-Home (FTTH) services.
Reliance Retail – Expanding Horizons
Reliance Retail continued to flourish, with revenue rising by 19.5% YoY to ₹69,948 crore in Q1FY24. The impressive growth was driven by crucial segments such as grocery, consumer electronics (excluding devices), fashion, and lifestyle.
The retail segment’s net profit increased by 18.8% YoY to ₹2,448 crore. EBITDA also demonstrated remarkable growth, reaching ₹5,139 crores, a 33.9% YoY increase. The rise in EBITDA margin from operations on net sales, up by 30 basis points YoY to 7.9%, resulted from improved efficiencies.
Reliance Retail continued its expansion efforts, opening 555 new stores during the quarter. Additionally, digital and new commerce businesses contributed 18% of the revenue, signalling their potential to drive further growth.
Media Business – IPL Boosting Revenue
RIL’s media business experienced significant revenue growth, increasing by 141.7% YoY to ₹3,239 crores, primarily driven by Viacom18, where the IPL on JioCinema delivered record advertising revenues.
While EBITDA also witnessed positive growth, rising by 56.5% YoY to ₹108 crores, the net profit for the segment dropped by 25.6% YoY to ₹29 crores. It’s important to note that the previous quarter (Q4FY23) incurred a loss of ₹35 crore.
JioCinema’s exceptional performance was a direct result of its expansive scale, unparalleled targeting capabilities, dynamic pricing options, precise measurement tools, and diverse integration opportunities. These features offered advertisers substantial advantages. With many new benchmarks, Viacom18 aimed to establish itself as India’s leading media company.
Summary
Reliance Industries’ Q1FY24 results presented a comprehensive picture of the conglomerate’s diversified portfolio, with some segments facing challenges while others demonstrated robust growth and resilience. Despite the fall in consolidated revenue and profit primarily due to the weaker performance of the O2C business, the company’s telecom and retail sectors showcased impressive growth trajectories.
RIL’s commitment to energy transition and financial inclusion in India through Jio Financial Services highlighted the company’s long-term vision and strategic initiatives. With a solid performance in its telecom, retail, and oil and gas segments, RIL continues to be a key player in the Indian market, and its ability to adapt and thrive amidst diverse challenges is a testament to its enduring strength and resilience.
(Note: The information displayed above is based on RIL’s media release.)
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