RIL Q1 profit declines nearly 11% on weak oil-to-chemicals business

The net profit was also lower quarter-on-quarter when compared with record Rs 19,299 crore earnings in the preceding three months ended March 31.

Operationally, the company posted a 5 per cent growth in EBITDA or earnings before tax, at Rs 41,982 crore. (Photo: Bloomberg)

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Reliance Industries Ltd (RIL) has reported a nearly 11 per cent decline in consolidated net profit at Rs 16,011 crore for the first quarter ended June 2023 as against Rs 17,955 crore in the same period of last year.

RIL said its mainstay refining and petrochemicals operation, which the conglomerate calls oil-to-chemicals, saw a decline in earnings “due to a sharp fall in fuel cracks from exceptionally high levels” in April-June of last year. Fuel margins had shot up globally in Q1 of last financial year as Russia’s invasion of Ukraine disrupted energy markets.

The board of directors of RIL has recommended a dividend of Rs 9 per share for its 35 lakh shareholders.

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Also Read | Reliance spin-off Jio Financial Services valued at $20 billion, above estimates

Gross revenue was Rs 231,132 crore ($28.2 billion), down 4.7 per cent from Rs 242,529 crore due to sharp decline in O2C revenues with 31 per cent fall in crude oil prices. However, this is partially offset by continued growth in consumer businesses and increase in volumes from O2C (oil to chemicals) and oil & gas business.

RIL’s subsidiary Reliance Jio Platforms has posted a 12.5 per cent rise in net profit at Rs 5,098 crore for the June quarter from Rs 4,530 crore a year ago. Gross revenue increased 11.3 per cent to Rs 30,640 crore during the quarter.

Reliance Retail, another RIL subsidiary, reported an 18.8 per cent growth in net profit at Rs 2,448 crore and gross revenue rose by 19.5 per cent to Rs 69,948 crore for the June quarter.

RIL shares closed 2.57 per cent lower at Rs 2,536.20 on the BSE on Friday. Its market capitalisation was at Rs 17.15 lakh crore.

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RIL Chairman and Managing Director Mukesh Ambani said: “Reliance’s strong operating and financial performance this quarter demonstrates the resilience of our diversified portfolio of businesses that cater to demand across industrial and consumer segments.”

Jio’s wide range of quality offerings at affordable price points has enabled strong growth in subscriber base, which reflects in the financial performance of the digital services business, he said. “Accelerated roll-out of Jio’s True 5G services is propelling the nation’s digital transformation at an unprecedented pace. In another step towards democratizing internet in India, Jio launched the “JioBharat” Phone Platform, making internet technology accessible and affordable to every Indian,” Ambani said.

Ambani said the retail business delivered robust growth, with fast-paced store additions and steady growth in footfalls. The contribution of digital and new commerce initiatives is scaling up, delivering value to consumers and providing synergistic benefits to merchant partners, he said.

Commencement of MJ field operations during the quarter will enhance India’s energy security, with total production from KGD6 block rising to 30 MMSCMD in the coming months, RIL said.

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“The process of demerger of the financial services business — Jio Financial Services Limited — is on track with key approvals in place. I firmly believe that Jio Financial Services is uniquely positioned to foster financial inclusion in India,” Ambani said.

RIL said the O2C segment delivered a resilient performance despite short-term macro challenges. “Demand was impacted by destocking on recessionary fears and high interest rates, as well as slower than expected ramp-up in China markets. Y-o-Y comparisons are skewed due to historic high fuel cracks in 1Q FY23, with dislocation in energy markets,” it said.