India’s largest company by market capitalization, Reliance Industries Ltd (RIL), has declared its second-quarter results for FY22. The conglomerate reported total revenue from operations of Rs 1,74,104 crore, an increase of 50% year-on-year (YoY). RIL’s net profit increased by a massive 43% YoY (or 11% QoQ) to Rs 13,680 crore. The figures have beaten all street estimates. In today’s article, we discuss how RIL and its various segments have performed in Q2 FY22.

Digital Services 

Jio Platforms Ltd reported total revenue of Rs 19,777 crore in Q2, compared to Rs 18,952 crore reported in the previous quarter. The net profit witnessed a 23.5% YoY (or 0.6% QoQ) increase to Rs 3,728 crore. There was a net decline in Jio’s customer base by 11.1 million due to the impact of the Covid-19 pandemic on low-end customers. Many users were unable to recharge due to financial difficulties. As of September 2021, the total customer base stood at 429.5 million users. Average Revenue Per User (ARPU) grew sequentially from Rs 138.4 to Rs 143.6 in this quarter. 

All figures except EBITDA Margin in Rs crore

There has been an improvement in subscriber mix and increased customer engagement levels. Total data traffic during the quarter increased by 51% YoY to reach 2,300 crore gigabytes (GB). The Covid-19 pandemic has forced most of us to get on digital platforms. Jio Fibre has over 4 million connected premises now. Also, JioMeet is now used extensively for conducting online meetings by many large enterprises, healthcare companies, and government institutions. 

Reliance Jio has maintained its top position in the 4G speed chart with a 20.9 Mbps average download speed in September 2021. The company is working with tech giant Google to make JioPhone Next (a highly affordable smartphone) available in time for the Diwali festive season.

Reliance Retail  

The retail segment of RIL was one of the hardest hit in the previous financial year due to nationwide lockdowns. But as restrictions have eased and vaccination rates are up, Reliance Retail has delivered a strong performance in Q2. The segment poised a 74% YoY growth in net profit to Rs 1,695 crore in Q2 FY22. Its revenue increased by 10.5% YoY (or 17.8% QoQ) to Rs 45,426 crore. 

All figures except EBITDA Margin in Rs crore

RIL’s retail business recorded higher store operating days at 89% in Q2, compared to 61% in the previous quarter. Meanwhile, footfalls (number of people entering shops) recovered to 78% of pre-Covid levels. The Fashion & Lifestyle business delivered record performance with the highest ever quarterly revenues. Consumer electronics and grocery divisions maintained strong growth momentum during the quarter. JioMart’s reach has extended to 249 cities with the launch of new stores and fulfillment centers.  

During the quarter, 813 new stores were launched, taking the total count to 13,635. Reliance Retail also commissioned 86 warehouses and fulfillment centres across an area of 2.5 million sq ft. to improve its service capabilities. They acquired Milkbasket (a subscription-based grocery delivery platform) and Portico (a home styling solutions brand). Reliance Retail Ventures Ltd’s (RRVL) acquisition of JustDial will add value to its merchant partners. You may have also come across reports of RRVL entering into a master franchise agreement with US-based 7-Eleven Inc. to launch convenience stores across India.

Oil-to-Chemical (O2C) 

The Oil-to-Chemical arm of Reliance performed well as a result of improved realisation on the back of an increase in oil prices and higher volumes. The segment posted a 58% YoY (or 16.7% QoQ) increase in revenue to Rs 1,20,475 crore in Q2. Earnings before Interest, Tax Depreciation, and Amortization (EBITDA) rose 44% YoY to Rs 12,720 crore. Last quarter, this number was at Rs 12,231 crore. The surge in the global demand for refining and petrochemical products has also aided growth in this segment.

Figures in Rs crore

To Sum Up 

RIL’s other segments such as Oil & Gas and Media had performed exceedingly well in the July-Sept quarter of FY22. Revenue of the Oil & Gas segment jumped 363.1% YoY to Rs 1,644 crore due to a 23% rise in production in Q2. Meanwhile, the media vertical’s revenue rose 31% YoY to Rs 1,387 crore, aided by a good recovery in advertisement sales. 

The sharp recovery in the retail segment, along with sustained growth in the O2C and digital services business has helped RIL post better-than-expected results. Reliance Retail’s rapid expansion of both physical stores and digital offerings has resulted in healthy growth of revenues and margins. Jio continues to hold a top position in 4G coverage and availability. The company has kickstarted 5G field trials at various locations. RIL continues to focus on green energy initiatives through strategic partnerships with multiple firms. 

“I am pleased that Reliance has posted a strong performance in 2QFY22. This demonstrates the inherent strengths of our businesses and the robust recovery of the Indian and global economies,” said Mukesh Ambani, Chairman and Managing Director at RIL.

You can find RIL’s media release for its Q2 results here. What are your opinions on Reliance Industries? Do you think that they will grow even faster in the coming quarters? Let us know in the comments section of the marketfeed app.

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