Gross Revenue at Rs255,996 crore, up 1.2% Y-o-Y; Resilient performance of the O2C (oil-to-chemicals) segment despite volatility in energy markets
FinTech BizNews Service
Mumbai, 27 October, 2023: Reliance Industries Ltd has reported a 29.7% Y-o-Y growth in its consolidated net profit at Rs19,878 crore ($ 2.4 billion) in Q2,2023-24.
Quarterly Performance (2Q FY24 vs 2Q FY23)
• Gross Revenue of Reliance Industries was Rs255,996 crore ($ 30.8 billion), up 1.2% Y-o-Y, supported by continuing growth momentum in consumer businesses.
• EBITDA increased by 30.2% Y-o-Y to Rs 44,867 crore ($ 5.4 billion), on account of following:
• Depreciation increased by 29.4% Y-o-Y to Rs 12,585 crore ($ 1.5 billion) on expanded asset base across all the businesses, higher network utilization in Digital Services business and ramp-up in upstream production.
• Finance Costs increased by 25.8% Y-o-Y to Rs 5,731 crore ($ 690 million) primarily due to higher interest rates and currency depreciation.
• Tax Expenses increased by 38.0% Y-o-Y to Rs 6,673 crore ($ 804 million) in 2Q FY24.
• Profit after tax improved by 29.7% Y-o-Y at Rs19,878 crore ($ 2.4 billion).
• Capital Expenditure for the quarter ended September 30, 2023 was Rs 38,815 crore ($ 4.7 billion) with continuing accelerated investments in pan-India 5G roll-out.
New global benchmark for fastest 5G roll-out
Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited, said: “Strong operational and financial contribution from all business segments has helped Reliance deliver another quarter of robust growth. I am happy that Jio remains committed to the vision of a digital India through the launch of two innovative and transformative offerings, JioAirFiber and JioBharat phone. Based on our state-of-the art standalone 5G network, JioAirFiber significantly expands the reach and benefit of high-speed connectivity to millions of households across India. JioBharat phone will enable digital inclusion for millions of Indians and catalyse India’s transformation to next-gen connectivity solutions. By December 2023, we will also complete Pan-India rollout of 5G services and set a new global benchmark for the fastest roll-out of a 5G network across a large nation. Reliance Retail has continued to rapidly expand its offline as well as online presence, while adding to its already impressive range of products and offering. We are providing a fresh and friendly shopping experience across our seamless ecosystem. The strength and diversity of our Retail business model is consistently delivering robust performance. Resilient performance of the O2C (oil-to-chemicals) segment despite volatility in energy markets was led by strong growth in fuel demand in a supply-constrained market. Weak global demand and supply-overhang continued to impact downstream margins. The growth of oil and gas business is particularly noteworthy with production from KGD6 block ramping up and providing valuable fuel for energy transition to the Indian economy.”
Oil To Chemicals (O2c) Segment
Quarterly revenue at Rs147,988 Crore, Quarterly EBITDA at Rs16,281 Crore.
Quarterly Performance (2Q FY24 vs 2Q FY23)
• Segment Revenue for 2Q FY24 reduced by 7.3% Y-o-Y to Rs 147,988 crore ($ 17.8 billion) primarily on account of a sharp 14% reduction in crude oil prices, resulting in lower price realization for products.
• Segment EBITDA for 2Q FY24 was higher by 36.0 % Y-o-Y at Rs 16,281 crore ($ 2.0 billion) with strength in gasoline and PVC margins, optimized feedstock sourcing and lower SAED in-line with decline in middle-distillate cracks. Downstream contribution remained weak with lower PE, PP and polyester chain deltas.
Operational Update
• Focus was on maximizing netbacks through: o Maximizing Alkylate and high RON gasoline export with improved premiums.
• Optimizing petrochemical production in subdued margin environment.
• Improved Gasifier availability and performance helped in minimizing the fuel mix cost.
• Shutdown of one Crude unit, Catalytic Cracking unit, Coker unit, Refinery Off-gas Cracker (ROGC) and Downstream units were initiated in the second half of September’ 2023 for regular maintenance & inspection.
Business Environment
• Global oil demand in 2Q FY24 rose 2.5 mb/d Y-o-Y to 102.7 mb/d, with strong demand mainly from China and India. Jet/Kero and gasoline posted robust demand growth Y-o-Y at 1 mb/d and 0.7 mb/d respectively, while diesel demand saw relatively lower growth of 0.2 mb/d.
•Crude oil benchmarks declined Y-o-Y due to macro-economic headwinds on high interest rates, lower industrial activities, and sentiments shifting from risk premium to fundamentals. Russian oil supply despite EU ban pressured prices. Dated Brent averaged $86.8 /bbl in 2Q FY24, lower by $14.1 /bbl Y-o-Y.
•Global refinery throughput was higher by 1.7 mb/d Y-o-Y at 82.9 mb/d in 2Q FY24.
•Domestic demand for transportation fuels remained healthy with continuing strong momentum in automobile sales and air passenger traffic. Demand for HSD, MS & ATF increased by 4.3%, 5.7% and 13.5% respectively over same quarter last year.
•Domestic polymer and polyester demand during 2Q FY24 improved by 25% and 12% Y-o-Y respectively with channel restocking on attractive price and continuing demand from infrastructure projects, pipes and packaging sector. Transportation fuels Quarterly performance
•Singapore Gasoline 92 RON cracks increased Y-o-Y to $13.1 /bbl in 2Q FY24 from $8.9 /bbl in 2Q FY23. Cracks rose due to higher seasonal demand, low inventories and unplanned refinery outages in Europe leading to tightened balances.
•Singapore Gasoil 10-ppm cracks fell Y-o-Y to $28.8 /bbl in 2Q FY24 from $41.1 /bbl in 2Q FY23. Cracks fell Y-o-Y due to weak macroeconomic sentiments and resilient Russian diesel supplies in the market.
• Singapore Jet/Kero cracks fell Y-o-Y to $26.1 /bbl in 2Q FY24 from $32.4 /bbl in 2Q FY23. Cracks moderated Y-o-Y in line with gasoil cracks as the sentiments shifted from risk premium to the fundamentals.
Polymers Quarterly Performance
• Polymer price declined by 7-10% Y-o-Y with subdued global demand and volatile energy price environment.
• US Ethane price was at 30 cpg, down by 46% Y-o-Y in line with lower US gas prices. Singapore Naphtha price was at $ 619/MT, down by 6% Y-o-Y.
• PE and PP markets remained well supplied, resulting in decline in deltas. PE margin over Naphtha averaged $335/MT during 2Q FY24 as against $365/MT in 2Q FY23. PP margin over Naphtha averaged $297/MT during 2Q FY24 as against $357/MT in 2Q FY23.
• PVC margin over Naphtha & EDC averaged $460/MT in 2Q FY24 as against $429/MT in 2Q FY23, with firm demand and decline in raw material price.
• Domestic polymer demand improved with increased economic activity. 2Q FY24 Polymer demand was up by 25% Y-o-Y. PE and PP demand improved by 31% and 15% respectively led by healthy demand in consumer durables, packaging, automotive, e-commerce and infrastructure sectors. PVC demand improved by 31% driven by healthy demand in pipes, wires and cables and infrastructure projects.
• A robust supply chain network and superior customer service supported optimal product placement in the domestic market. RIL continued to maintain leadership position in domestic polymer market.
Polyesters
• Polyester chain delta decreased Y-o-Y with weaker deltas across the chain except PX amidst slow demand recovery in China. Polyester chain margin was $ 524/MT during 2Q FY24 as against $ 600/MT in 2Q FY23.
• During 2Q FY’24, PX margin over Naphtha improved Y-o-Y with strong PTA operation in China and favourable gasoline economics led to diversion of PX production into gasoline pool. PTA margins impacted due to firm PX prices. MEG-Naphtha margins remained stable Y-o-Y; however, continue to remain significantly below 5-year average amidst higher China MEG inventory levels and capacity overhang.
• On Y-o-Y basis, domestic polyester demand increased by 12% with improvement in PET demand by 28% amidst strong pull from beverage segment. Both PSF and PFY demand improved by 8% due to improved economic activities and pre-festive season stocking.
Jio-bp update
• Reliance BP Mobility Limited, operates 1,663 Jio-bp branded outlets across the country. It is delivering pioneering HSD and high-performance petrol, backed by internationally developed active technology, at prevailing market rate across its network.
• Backed by industry shift to transparent pricing and high service standard, Aviation has grown domestic volumes and onboarded multiple international airlines.
• There was an increased volume traction at both CNG and CBG in line with emphasis on gaseous fuel.
• With 3600+ live charging points (including 19 charging hubs), Jio-bp is country’s largest Charge point operator in public fleet hub charging. Jio-bp was awarded the “Service Excellence Award” in Charging Infrastructure Fleet (Public) Category at India fleet Show at Bengaluru.
Oil And Gas (Exploration & Production) Segment
Quarterly Performance (2Q FY24 vs 2Q FY23)
• 2Q FY24 Revenue is higher by 71.8% as compared to 2Q FY23 mainly on account of higher production of Gas & Oil and commencement of Condensate production from MJ field along with 6% higher gas price realization in KG D6.
• The average price realized for KG D6 gas was $ 10.46/MMBTU in 2Q FY24 vis-à-vis $ 9.86/MMBTU in 2Q FY23. The average price realised for CBM gas was $ 13.72/MMBTU in 2Q FY24 vis-à-vis $ 23.34 / MMBTU in 2Q FY23.
• EBITDA increased to Rs 4,766 crore which is up by 50.3% on Y-o-Y basis. EBITDA margin was at 72% for 2Q FY24. Margins were compressed during the quarter due to higher costs related to commissioning and ramp-up of MJ field and decommissioning activities at Tapti field.
Strategic Progress
KG D6 – MJ Field Project Update
• The Drilling & Completion campaign for MJ wells has been completed successfully. All eight wells are now completed, connected, and producing.
• With incremental gas production from MJ field, along with ongoing production from R Cluster and Satellite Cluster fields, Block KG D6 is currently producing 29 MMSCMD.
CBM
• As part of production augmentation plan, additional 40 wells program has commenced. Production is expected to ramp-up from 4Q FY24.
KG UDW1 – Exploration Update
• First exploration well in Block KG UDW1 is planned to be drilled in 2H FY24.
