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.

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.

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