Reliance share falls 4% post Q1 results: here’s why

/2 min read

ADVERTISEMENT

RIL’s Q1 consolidated net profit surges 46.3% YoY to ₹17,955 crore; earnings missed estimates due to higher expenses
Reliance share falls 4% post Q1 results: here’s why
Reliance share drops 3.7% to ₹2,409.20 on Monday  Credits: Fortune India

Shares of Reliance Industries (RIL) fell nearly 4% in early trade on Monday, in line with broader market, as investors reacted to the company’s quarterly results which came post market hours on Friday. Billionaire Mukesh Ambani-led RIL has reported solid numbers in Q1FY23, driven by robust oil earnings as discounted crude oil imports from Russia boosted margins. The company, however, missed earnings estimates due to a surge in expenses in the backdrop of volatility in crude prices as well as higher energy and freight costs.

At 9:40 AM, RIL share price was trading 3.7% lower at ₹2,409.20 levels after opening lower at ₹2,469, against the previous closing price of ₹2,502.90 on the BSE. In comparision, the S&P BSE Sensex was quoting at 55,783 levels, down 288 points, or 0.5%. The recent trend reversal in crude prices, which slipped below $100 per barrel in the last one week, and forecasts of a steep fall in global crude demand dragged the share price lower. According to a ICICI Securities report, the demand collapse is expected due to fears of recessionary trends across Western Europe and estimates of a corresponding improvement in crude supply, particularly from non-OPEC countries.

Fortune India Latest Edition is Out Now!

Read Now

The RIL stock price has given a flat return of 0.5% in the calendar year 2022, while it has surged more than 16% in the past one year. The country’s most valued firm has delivered 2% returns in last six months, while it fell over 3% in past one month amid concerns that continued slide in crude prices and windfall taxes on fuel exports would impact its profitability margins.

In Q1FY23, Reliance Industries posted a 46.3% rise in consolidated net profit attributable to owners at ₹17,955 crore, from ₹12,273 crore in the same quarter last year. Consolidated revenue from operations surged 54.5% to ₹223,113 crore as compared to ₹144,372 crore in the year-ago period. Total expenses jumped 50.9% to ₹198,059 crore, from ₹131,284 crore in Q1FY22. The earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 45.8% to ₹40,179 crore. The earnings per share (EPS) surged by 40% to ₹26.5.

Segment-wise, telecom arm Reliance Jio posted a net profit of ₹4,335 crore, up 23.82% YoY, while revenue grew 21.56% on yearly basis to ₹21,873 crore. During the quarter under review, the average revenue per user (ARPU) increased to ₹175.7 per subscriber per month, registering a growth of 27% YoY.

Meanwhile, the retail subsidiary Reliance Retail delivered its best-ever quarterly revenues despite a challenging macro environment. Gross Revenue stood at ₹58,554 crore, up 51.9% YoY, while net profit surged more than two-fold to ₹2,061 crore.

The O2C business also registered an all-time-high revenue and EBITDA. The revenue jumped 56.7% YoY to ₹161,715 crore on the back of higher crude oil and product prices, while segment EBITDA climbed by 62.6% YoY to ₹19,888 crore.

Post Q1 results, domestic brokerage ICICI Securities maintained “ADD” rating on RIL stock, with a revised target price of ₹2,710 as compared to ₹2,865 estimated earlier. The brokerage believes that there is limited upside from here due to stronger capex momentum; already strong multiples factored into current market price; limited signs of return of capital to shareholders.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.