Reliance (RIL) | Q1 FY23 result analysis

RIL is a conglomerate in itself - with multiple businesses under its umbrella.

Its operations include exploration, refining and marketing of oil and gas, manufacture of petroleum products, polyester products, plastics, chemicals, textiles fabrics etc.

It is also involved in dining and hospitality, EV charging and battery swapping, integrated payment platform system, digital commerce, pharmacy retail, electronics specialty stores, telecom business, jewellery business, apparel specialty stores, supermarkets, toys business, entertainment industry and what not!

Reliance posted its Q1 FY23 results yesterday (22 July 2022).

In this blog, we will analyze the said results.

The main segments as per the company’s management are:

Oil to Chemicals (O2C): It includes Refining, Petrochemicals business, fuel retailing through Reliance BP Mobility Limited, aviation fuel and bulk wholesale marketing. Basically, it includes breadth of portfolio spanning transportation fuels, polymers, polyesters and elastomers.

Oil and Gas: This segment includes exploration, development and production of crude oil and natural gas.

Retail: This segment includes consumer retail and range of related services.

Digital Services: This segment includes provision of a range of digital services.

Financial services: This segment comprises of management and deployment of identified resources of the Company to various activities including non-banking financial services, insurance broking.

Others: Businesses which are not separately reportable are grouped under the “Others” segment.

QoQ growth: We have only considered the QoQ growth and have not considered the YoY growth as June 2021 was an exceptional quarter due to the Covid 2^nd wave.

O2C: Revenue up by 11%, at 1,61,715 crores ,EBIT up by 45%, at 18,016 crores

Oil and Gas: Revenue up by 80%, at 3,625 crores, EBIT up by 120%, at 2,089 crores

Retail: Revenue up by only 1%, at 58,569 crores, EBIT down by 3%, at 2,995 crores

Digital services: Revenue up by 5%, at 28,511 crores, EBIT flat, at 7,036 crores

Financial services: Revenue down by 50%, at 271 crores, EBIT down by 41%, at 99 crores.

Some ratios: 
The Debt service coverage ratio stands at 4.14 (0.78 in the last quarter)
Debt: Equity stands at 0.33 (0.34 in the last quarter)
Net profit margin at 8% (7.7% in the last quarter)

Other points: 

Consolidated net profit at 19,443 crores, up 41% YoY.

Reliance retail added 792 stores in this quarter, taking the total count to 15,866. Footfalls surpasses pre-COVID levels with over 17.5 crore walk-ins during the quarter. 22 crore transactions in 1Q FY23, up >60% over pre-COVID.

In digital segment, ARPU at 175.7, up 27% YoY. Jio added 97 lakh customers in this quarter - has a total customer base of 42 crore customers. Data traffic share at 60%, which is more than the next 2 operators combined.

Reliance Jio has done successful external validation of its 5G rollout plan.

In Pharma (Netmeds), merchant base is up 50% QoQ, operations scaled to over 2400 cities.

Despite significant challenges posed by the tight crude markets and higher energy and freight costs, O2C business has delivered its best performance ever, said Mr. Mukesh Ambani.

Prima facie, the results seem to be good. It would be pertinent to note as to how does the stock price moves here further.

Note: This is not a recommendation to buy or sell the stock.