Reliance spent double its profit on capex in just 9 months

Chairman Mukesh Ambani has accelerated the capital expenditure cycle in Reliance Industries Ltd (RIL) to strengthen the company's new businesses -- 5G and solar -- and hydrocarbon exploration and production. The company recorded ₹49,824 crore profit in the first nine months of this financial year, while it spent ₹1.13 lakh crore as capital expenditure, which include ₹43,589 crore paid towards acquisition of spectrum by Reliance Jio Infocom Ltd.

In the December quarter, RIL posted a 37.9% jump in its net profit (after exceptional items) at ₹20,539 crore. The gross revenue increased by 52.2% to ₹209,823 crore. The earnings before interest, tax, depreciation and amortisation (EBITDA) was ₹33,886 crore, higher by 29.9%. The company had and exceptional gain of ₹2,872 crore on account of divestment of shale gas assets. The earnings per share (EPS) (after exceptional items) for the quarter was ₹28.1 per share, increased by 38.1%

The exports (including deemed exports) from RIL’s India operations increased by 105.3% to ₹64,781 crore as against ₹ 31,559 crore a year back. The finance cost decreased by 11.9% to ₹3,812 crore, which reflects paydown of debt. The outstanding debt was ₹244,708 crore. However, it had cash and cash equivalents of ₹241,846 crore on books.

The company invested ₹1.13 lakh crore in the nine months of financial year. The capital expenditure for the December quarter was ₹27,582 crore. In the nine months period, the company spent ₹69,303 crore towards its business expansion.

The company's EBITDA from B2B and B2C segments were almost equal in the third quarter. Jio Platforms Ltd (JPL) posted a gross revenue of ₹24,176 crore, higher by 13.8%, thanks to higher average revenue per user (ARPU). At ₹151.6 per month, ARPU witnessed a healthy 8.4% growth on Y-o-Y and 5.6% improvement on Q-o-Q. The net profit of JPL improved 8.9% to ₹3,795 crore. The EBITDA has risen 18% to ₹10,008 crore. The EBITDA Margin at 48.6%, increased 5%.

Mukesh Ambani, chairman and managing director at RIL, said the two consumer businesses, retail and digital services have recorded highest ever revenues and EBITDA. "During this quarter, we continued to focus on strategic investments and partnerships across our businesses to drive future growth," he added.

The telecom business added 10.2 million customers in the December quarter and the customer base expanded to 421 million. For a comparison, Vodafone Idea, which announced the result on Friday, added 8 lakh customers in the period. Jio's data traffic was 23.4 billion GB during the quarter, an increase of 47.8%.

Jio has prepaid all its deferred spectrum liabilities of ₹30,791 crore during the quarter. It will result in interest cost saving of ₹1,200 crore annually, said the company. Jio and Google also launched JioPhone Next during the quarter.

Reliance Retail recorded gross revenue of ₹57,714 crore, a 52.5% jump Y-o-Y. All time high revenues were recorded across all consumption baskets driven by highest ever store sales and sustained growth momentum in digital and new commerce, said the company. Consumer electronics and apparel & footwear segments doubled their business on the back of strong festive sales while grocery continued the double-digit growth momentum.

The retail business posted a record EBITDA of ₹3,822 crore, up 23.8%, led by strong revenue recovery, operating leverage and favourable revenue mix from fashion and lifestyle, consumer electronics and grocery. The net profit of retail business increased 23.4% to ₹2,259 crore.

Ambani said the retail business activity has normalised with strong growth in key consumption baskets on the back of festive season and as lockdowns eased across the country. Reliance Retail added 837 stores during the quarter, taking the total count to 14,412 stores and 2.3 million sq ft. of warehousing space. The retailer acquired grocery chain Jaisuryas, women’s intimate wear brand Amante and women’s saree and ethnic wear brand Kalanikethan. It made strategic investment in Ritika Pvt Ltd that owns – Ritu Kumar and allied brands and Manish Malhotra’s eponymous brand. Reliance Retail also invested $200 million in Dunzo, delivery and quick commerce player, for 25.8% stake.

The oil-to-chemicals (O2C) segment's revenue increased by 56.8% to ₹131,427 crore on account of increase in crude oil prices and higher volumes. The segment EBITDA improved by 38.7% to ₹ 13,530 crore. However, the EBITDA margin declined by 1.3% to 10.3%.

The exploration and production segment's revenues increased by 494% to ₹2,559 crore. The EBITDA also sharply increased to ₹2,033 crore, with EBITDA margin of 79.4%, thanks due to ramp-up of gas production from KG D6 and improved price realisation. The gas production from KG D6 (RIL's share) in the third quarter was at 39.5 billion cubic feet (BCF) compared to 1.07 BCF in the same period last year.