RIL Q3 results: Reliance Jio, Retail overtake refining and petchem in EBITDA

For the first time, the consumer businesses of Reliance Industries (RIL) - Jio Platforms and Reliance Retail - overtook the cash flow of its flagship refining and petrochemicals in the December ended quarter. While the oil to chemicals (O2C) business witnessed a 28 per cent fall in Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA), the digital services and retail businesses reported EBITDA growth of 48.4 per cent and 13.4 per cent, respectively.

V Srikanth, Joint Chief Financial Officer, RIL said, "In the O2C segment, we have seen demand revival. The downstream product deltas have been strong and this in some sense has negated the weakness in the fuel market. Jio EBITDA continued to grow on the back of subscriber addition and higher ARPU. The retail business benefited from a sharp rebound in fashion and lifestyle and the investment income from the recent capital raising. The consumer business accounts for 51 per cent of EBITDA, compared to 37 per cent a year back."

The consolidated EBITDA of digital services business grew by 6.4 per cent quarter-on-quarter (QoQ) to Rs 8,483 crore. The customer base increased to 410.8 million with net addition of 5.2 million customers in the third quarter. The average revenue per user (ARPU) increased to Rs 151 a month from Rs 145. The data traffic increased by four per cent and voice traffic improved by 4.6 per cent. During the quarter, Google invested Rs 33,737 crore into Jio Platforms (JPL) for 7.73 per cent stake. With this, the total investment JPL stood at Rs 152,056 crore.

Lifting of lockdown restrictions helped Reliance Retail to operate 96 per cent of its stores in the quarter. The footfalls remained at similar levels to last quarter but still lower than pre-COVID levels. The grocery business and electronics stores sustained double digit growth while the fashion and lifestyle business delivered a strong rebound, surpassing pre COVID levels. Reliance Retail added 327 new stores, taking the total store count to 12,201, which spread over 31.2 million sq. ft. The retail entity has added over 50,000 new jobs since the beginning of pandemic, it said.

The segment EBITDA of O2C business improved by 10.3 per cent quarter-on-quarter (QoQ) on account of higher product sales and shifting of product placement from exports to domestic market. During the quarter, the polymers margins were at a record high while intermediate margins were sequentially better. However, the refining business has continued its weak performance as transportation fuel markets continued to remain challenging with excess supply and second COVID-19 wave hurting demand from European and US markets. The domestic demand continued to improve with oil product demand growth at 19 per cent QoQ. The oil demand for December was at 99 per cent of pre-COVID level, said the company.

The oil and gas exploration and production vertical has arrested its losses and posted positive EBITDA after 3-4 years. After meeting losses at the shale gas business in the US, RIL has impaired its investment in shale gas subsidiaries worth Rs 15,686 crore. The company has also recognised deferred tax assets of Rs 15,570 crore in respect of the difference between the book base and tax base of the shale gas operations, in accordance with Ind AS 12 - Income Tax. With this, the net impact on the books stood at Rs 116 crore.

Also Read: Infographic: Sensex at 50,000 - The journey

Also Read: RIL Q3 results: Profit rises 12.5% to Rs 13,101 crore, revenue down 22%

Also Read: Reliance Jio Q3 results: Net profit jumps 15.5% to Rs 3,489 crore