Reliance Industries Q2 results

India’s largest and most valuable continued to surprise the street on the positive side. For the second quarter ending Sep-21, Reliance Industries reported 49.84% growth in total revenues at Rs.174,104 crore. For the Sep-21 quarter, the bottom line net profits were up 43% on a YoY basis at Rs.13,680 crore. This is the highest PAT achieved by RIL in a quarter.
 

Reliance Industries Q2 results
 

A better way would be to look at the numbers on a sequential basis, i.e. compared to the previous Jun-21 quarter. Compared to Jun-21, the revenues were higher by 20.59% compared to Rs.144,372 crore reported by Reliance Industries in the Jun-21 quarter. The robust YoY growth in the Oil to chemicals (O2C) business was on the strength of robust Brent Crude prices at above $85/bbl and above median gross refining margins or GRMs.

Check - Crude Oil at $83/bbl – Gainers & Losers

Let us now look at the break-up of the overall revenues. The largest O2C business of Reliance saw YoY growth of 58% at Rs.120,475 crore. The retail segment (consisting of the brick & mortar and online retailing of RRVL) saw growth of 10.5% at Rs.45,450 crore. The third big pillar of top line growth, digital business, saw revenues grow by 7.4% at Rs.24,362 crore.
 
Reliance Jio has already emerged as the largest mobile player in India in terms of subscriber numbers. However, ARPU pressures did stifle the top line growth in the quarter. While O2C still contributes the biggest share of revenues, retail and digital combined now contribute 60% of O2C revenues; which is a big deal.

Who contributed most to the EBIT of Reliance. O2C led the sweepstakes in absolute rupee terms, but its EBIT margins of the O2C business is just over 10%. Retail has even lower margins at about 6% on revenues, which is due to the front-ending of investments.

However, the star contributor to EBIT in terms of margins was digital business with EBIT margins of 40%. The EBIT contribution of retail and digital put together is as much as EBIT of O2C business. Interestingly, Reliance also reported 42% boost to cash profits at Rs.23,932 crore. Exports of Reliance in the quarter were up 59% YoY at Rs.59,844 crore.

Average revenue per user (ARPU) of Jio stood at Rs143.60, while data traffic was up 59% at 23 billion GB. EBITDA margins improved from 43.1% to 47%. However, due to the much larger top line base and the pressure of retail profitability, the net margins at 7.86% was lower than both comparable quarters.

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