Can data overtake oil in RIL?

Oil is still ahead of data in Reliance Industries (RIL), but the gap is narrowing. The earnings before interest, tax, depreciation and amortisation (EBITDA) of RIL’s oil business—including refining and petrochemicals—has recorded a 43.9% growth to ₹12,720 crore in September quarter. In comparison, the data-centred business of Jio Platforms Ltd (JPL) registered a 16.6% growth in EBITDA to ₹9,294 crore.

RIL chairman and managing director Mukesh Ambani envisages the data business as the new oil. Proving his point right, Reliance Jio has grown rapidly in the last six years and has overtaken the incumbents in the industry with a stellar financial performance. The global fundraising of JPL has also helped RIL to become net debt-free. However, Jio has its challenges as the subscriber addition has slowed down.

In the July-September quarter, JPL, the holding company of telecom and digital services, posted a 23.5% growth in profit to ₹3,728 crore on a revenue of ₹23,222 crore, which increased by 15.2%. The EBITDA was ₹9,294 crore, up by 16.6%. The customer base has fallen to 429.5 million in September from 440.6 million in June. However, the monthly average revenue per user (ARPU) increased to ₹143.6 from ₹138.4. The data traffic has jumped over 50% in the network of Jio.

Jio and Google are working together to make JioPhone Next available widely during Diwali season. JioFiber has over four million connected premises. Jio's optical fiber network is now physically present outside 16 million premises.

The revenue of Reliance O2C Ltd—which include refining and petrochemicals business—increased by 58.1% to ₹120,475 crore due to improved realisation on the back of an increase in oil prices and higher volumes. The segment EBITDA improved by 43.9% to ₹12,720 crore, thanks to better transportation fuel cracks, higher intermediates product deltas, efficient product placement and yield management. However, the EBITDA margin declined by 100 basis points to 10.6%.

The oil and gas production has increased by 23% to 6 million Standard Cubic Meters per day (MSCMD) from Satellite Cluster field ahead of plan and new wells brought into the stream in the U.S. Shale Eagleford Assets. The combined average production from KGD6 Block was over 18 MSCMD during the quarter. Due to a surge in volume, the segment revenues increased by 363% to ₹1,644 crore. The EBITDA stood at ₹ 1,071 crore compared to an EBITDA loss of ₹194 crore in the same quarter last year. The first gas from the MJ field in KG D6 will come on stream by December 2023.

Reliance Retail recorded a 74.2% rise in profit to ₹1,695 crore. However, the revenue increased only 10.5% to ₹45,426 crore. The EBITDA was ₹2,913 crore, higher by 45.2%. The retail giant has added 813 new stores in the quarter. With this, the total number of physical stores increased to 13,635. The area of operation increased to 37.3 million sq. feet from 29.7 million sq. feet. RRL’s 89% stores are operational, compared to 60% in the first quarter, thanks to the withdrawal of Covid-19 related restrictions. The footfalls in the retail stores reached 78% of pre-Covid levels in the second quarter.

The retail business re-established growth momentum in fashion and lifestyle with sales closing above pre-pandemic levels. The consumer electronics and grocery maintained strong growth momentum, said the officials.

RIL’s profit has increased by 46% to ₹15,479 crore in the July-September quarter, while the gross revenue surged by 49.2% to ₹1,91,532 crore. The EBITDA was ₹30,283 crore, up by 30%. The earnings per share has increased by 40.7% to ₹20.9. The exports from RIL’s India operations increased by 59% to ₹54,844 crore due to higher price realisations despite lower volumes of downstream products. The finance cost has decreased by 37.2% to ₹3,819 crore because of large payoffs of debt and other liabilities.

The outstanding debt was ₹2,55,891 crore. However, the balance sheet is cash surplus because of higher cash and cash equivalents of ₹2,59,476 crore. The higher cash component is because of ₹1,15,694 crore fundraising of Jio Platforms Ltd (JPL) and ₹47,265 crore by Reliance Retail Ventures Ltd (RRVL). The capital expenditure for the September quarter was ₹25,037 crore. Jio has spent an additional ₹14,313 crore for the acquisition of spectrum.