PremiumListen to this article |
India's largest company in terms of market valuation, Reliance Industries (RIL) will be in focus in the next week's trading session after the company announced its financial performance for the quarter ending June 30, 2022 (Q1FY23). RIL's earnings were healthy, however, due to a spike in expenses, it missed analysts' estimates. Furthermore, RIL posted double-digit growth in the bottom-line front, while revenue was robust on the back O2C business that delivered its best ever quarterly performance despite volatile conditions. Reliance Retail and Reliance Jio earnings were also strong in the quarter.
In Q1FY23, the company's consolidated net profit attributable to owners stood at ₹17,955 crore rising by 46.3% from ₹12,273 crore in the same quarter last year. Consolidated revenue from operations jumped by 54.5% to ₹223,113 crore from ₹144,372 crore in Q1 last year. Total expenses were at ₹198,059 crore up by 50.9% from ₹131,284 crore in Q1FY22.
Meanwhile, consolidated EBITDA stood at ₹37,997 crore in Q1FY23 higher than ₹23,368 crore in Q1FY22 and ₹31, 366 crore in Q4FY22. Its margin improved to 17.3% versus 16.7% in Q1FY22 and 15.1% in Q4FY22.
Reliance Retail delivered a strong performance with its best-ever quarterly revenues in a macro environment that remained challenging. Gross Revenue was at ₹58,554 crore registering a growth of 51.9% yoy, and net profit was at ₹2,061 crore higher by 114.2% yoy.
Meanwhile, telecom subsidiary Reliance Jio registered a net profit of ₹4,335 crore in Q1FY23 up by 23.82% yoy, and revenue of ₹21,873 crore rising by 21.56% yoy. During the quarter, RJio's ARPU stood at ₹175.7 per subscriber per month and saw a healthy 27.0% growth on yoy basis and 4.8% growth on qoq basis. Net subscriber addition witnessed a strong rebound to 9.7 million.
The company's O2C business delivered its best-ever quarterly performance with all-time-high Revenue and EBITDA. Segment Revenues for Q1FY23 increased by 56.7% yoy to ₹161,715 crore primarily on account of higher crude oil and product prices. Benchmark Brent crude average price was up 65% yoy to $113.9/bbl. Segment EBITDA for 1Q FY23 improved by 62.6% yoy to ₹19,888 crore primarily on account of a sharp rise in transportation fuel cracks and better volumes.
On Friday, RIL shares closed at ₹2502.90 apiece up by ₹15.50 or 0.62%. Its market cap is around ₹16,93,245.73 crore.
RIL shares after Q1 earnings will contribute to swaying market performance next week.
Should you invest in RIL shares post Q1 earnings?
According to Avishek Datta - a research analyst at Prabhudas Lilladher said RIL garnered record results in Q1, but higher expenses leads to the earnings miss.
Datta pointed out, that RIL reported record Q1 results with standalone EBIDTA/PAT of ₹220 billion (+51%Q/Q; PLe ₹260 billion) and Rs150.9 billion (+36%Q/Q; PLe Rs205bn) respectively. O2C EBIDTA was at Rs194 billion (+35%Q/Q). RIL remains well placed to benefit from higher GRMs in the tough energy market as EU bans the import of products from CY23. Meanwhile, Gas EBIDTA was at Rs27.1 billion (+79%Q/Q). The gas realization was at $9.8/mmbtu versus $6.1 in Q4 while volume was at 19mmscmd.
RIL is targeting a gas volume of 30mmscmd by FY24.
The analyst said EBIDTA miss was due to higher expenses at Rs136 billion (+24%Q/Q). Furthermore, Jio EBIDTA was at ₹109.6 billion while PAT was at ₹43.3 billion. ARPU was at Rs175.7 from Rs168 in Q4 and subscriber addition was at 10m. The company opened 790 retail stores in Q1 and now has over 15,866 stores.
Datta has reiterated a 'Buy' recommendation on RIL shares.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.