Reliance Industries (RIL) reported a modest rise in quarterly profit, helped by higher price realisations in its retail, oil-to-chemicals (O2C) and the digital services (Jio) businesses. Profit grew 4% to £1.38 billion in Q1FY22. Revenue totalled over £14 billion, up 58%, even as it faced disturbance in its activities due to the second wave of the pandemic. If the £496.6 million exceptional gain of Q1FY21 is excluded, then the company’s Q1FY22 profit is up 67%.
Operating profit edged up 28% in the April through June months, aided by strong earnings in its three main businesses. “The results demonstrate the resilience of Reliance’s diversified portfolio of businesses that cater to large parts of the consumption basket,” said chairman and MD Mukesh Ambani. Operating profit of digital services climbed 19% to £926.8 million due to higher data usage by people, while remaining sheltered at homes due to Covid.
However, average revenue per user (ARPU), a key metric that influences income, was down to Rs 138 even as the company added 14 million subscribers in Q1FY22. ARPU is the total revenue of the telecom operator divided by the number of users on its network. Launched in 2016, Jio has 441 million customers and saw data and voice traffic growth of 39% and 20%, respectively, on its network. ARPU in the year-ago period was Rs 140.
Operating profit of O2C increased 50% to £1.22 billion due to higher exports and price realisations. The company had combined its refining and petrochemicals units to form O2C. Significantly, digital’s profit was higher than its traditional bread and butter O2C business.
Operating profit of retail rose 80% to £195.3 million, despite constrained operating conditions. Grocery and consumer electronics boosted the growth. To be sure, RIL had transferred the petro-retailing business to a joint venture with BP. “Covid-related restrictions on store operations impacted our retail operations. This is a temporary phenomenon. We remained focused on ensuring supplies of necessities through a combination of online-offline channels,” said Ambani.
Store expansion was constrained as the business opened just 123 outlets. Operating profit of financial services, which the company recently started to report separately, plunged 65% to £13.2 million. Oil & gas, which recently turned around with revival in KG-D6 gas production, made an operating profit of £79.7 million. While, operating profit of media unit zoomed 596% to £18.8 million. RIL’s debt at the end of Q1FY22 was £25.3 billion. But RIL had more than enough in cash and cash equivalents (about £25.7 billion) to cover its debt.
