Reliance Industries Q4: Profit jumps as new businesses chip in and other key takeaways

Reliance Industries Ltd chairman and billionaire Mukesh Ambani bet big on new businesses a few years back. “Data is the new oil,” he famously said in 2019, giving hints on in which direction he wants to take India’s biggest company.

Many of his bets seem to be paying of now.

The latest earnings of India’s biggest private-sector conglomerate shows that the contribution of the retail and digital businesses has been progressing steadily in overall revenue, helping the company reduce its dependence on its mainstay oil refining and petrochemical business.

The revenue of the retail segment grew over 30% in the 2022-23 financial year, while the revenue of the digital segment, which also comprises of telecom services under the Jio brand, grew nearly 20%. The share of retail segment in the overall revenue also grew to 29.2% in FY23 from 27.7% in FY22.  

Share of the digital services segment in the overall revenue fell marginally to 13.4% in FY22 from 13.9% FY21, but that should be seen in the light of RJio still consolidating its position as the leader in the Indian telecom sector at the cost of revenue and profitability. If one were to compare from FY20, the share of the digital segment in overall revenue has risen steadily from 11.4% to 13.4%.

A similar trend is visible in the operating profit share of the company over four years. Compared with a share of 11.8% in operating profit in FY20, the retail business’ pie has climbed to 12.7% in FY23. Similarly, share of digital business in operating profit grew from 20.8% in FY20 to 27.0% in FY23.

The five-year CAGR for digital services’ revenue, EBITDA, net profit stood at 38%, 49.2% and 91.5%, respectively. The five-year CAGR for retail business’ revenue, EBITDA, net profit stood at 30.2%, 48.0% and 47.5%, respectively.  In contrast, all these figures of the energy business stood in single digits from 5-7%.

RIL Q4 consolidated results

Reliance Industries beat most estimates for the quarter and year ended March 31, reporting fourth-quarter profit of Rs 19,299 crore, up 19.1% year on year from Rs 16,203 crore. Sequentially, profit was up 22.2% from INR 15,792 crore for the quarter ended December 31.

Profit before tax for the fiscal year was Rs 66,702 crore, up 9.9% year on year from Rs 60,705 crore a year earlier.

Consolidated revenue from operations was Rs 2,16,376 crore up 2.1% year on year from INR 2,11,887 crore in the corresponding period a year earlier. Sequentially, revenue from operations though fell 1.9% from INR 2,20,592 crore in the quarter ended December 31.

For the year ended March 31, the company’s revenue from operations was INR 8,92,944 crore, up 23.7% year on year from Rs 7,21,634 crore in the corresponding period a year ago.

Brokerages had forecast the company’s fourth net sales between Rs 2,26,872 crore and Rs 2,36,300 crore and net profit in a range of Rs 16,455 crore and Rs 18,800 crore.

RIL Q4 consolidated finance cost and debt

The company's finance cost for the fourth quarter ended March 31 jumped 63.6% year on year to Rs 5,819 crore from INR 3,556 crore in the corresponding quarter a year prior. Sequentially, finance cost was up 11.9% from Rs 5,201 crore for the quarter ended December 31.

Finance cost for the fiscal year was Rs 19,571 crore, up 34.2% year on year from Rs 14,584 crore a year earlier.

Gross debt grew by Rs 48,403 crore in a year to March 31, 2023 to Rs 314,708 crore, while cash fell by Rs 27,000 crore to Rs. 204,490 crore. However, the company has managed to keep its net debt to EBITDA ratio at below 1x.

RIL's retail operations

In the fourth quarter the gross revenue of the retail business grew 19% year in year to Rs 69,267 crore, while profit after tax grew 13% to 2,415 crore. For FY23, gross revenue grew to Rs 260,364 crore and profit after tax to Rs 9,181 crore, both up 30%.

Key highlights of retail operations:

1. Added 3,300 new stores in FY23 and 25 million square feet of retail space
2. Total transactions cross 1 billion in FY23, up 42%
3. Footfalls at 780 million in FY23, up 50%
4. Total EBITDA up 45% at Rs 17,928 crore in FY23
5. Retail pharma fourth quarter revenue up 51% YoY in led by offline network expansion
6. Milkbasket continues steady growth in the fourth quarter, up 25% YoY, operational in 24 cities
7. Consumer electronics business, excluding devices, grew 37% YoY in the fourth quarter; Devices lags

RIL's digital business

In the fourth quarter the gross revenue of the Jio Platforms Ltd. grew 14.2% year in year to Rs 29,871 crore, while profit after tax grew 15.6% to 4,984. For FY23, gross revenue grew 20.1% to Rs 1,15,099 crore and profit after tax rose 23.5% to Rs 19,124 crore.

Key highlights of digital business:

1. Jio adds 29.2 million net subscribers during FY23
2. Per capita data and voice usage at 23.1 GB and 1,003 min per month
3. RJIL customer base was at 439.3 million, up from 410.2 million a year ago
4. ARUP in the fourth quarter grew to Rs 178.8 rupees per month from Rs 167.6 per month a year ago and 178.2 rupees per month a quarter ago.
5. Per capita voice consumption improved to 1,003 minutes per month in the fourth quarter from 968 minutes per month a year ago.
6. Jio Platforms fourth quarter EBITDA grew 17.0% YoY with 110 basis points rise in margins.