RIL net profit rises 19% to Rs 19,299 crore in Q4 to highest ever

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Buoyed by declines in raw material costs and significant savings in tax expenses, Reliance Industries (RIL) reported a higher-than-expected net profit for the January-March 2023 quarter (Q4FY23) despite weak revenue growth during the quarter. .

The company recorded the highest ever consolidated net profit of Rs.19,299 crore in the quarter, up 19.1 per cent year-on-year from Rs.16,203 crore in the fourth quarter of FY22. Net profit was up by 22.2 per cent over the previous quarter from Rs.15,792 crore in the quarter. Third FY23. Analysts expected the company to report consolidated net profit of Rs.17,850 crore.

Revenue at RIL rose 2.7 percent year-on-year to 2.13 trillion rupees in the March quarter, while for the full year it jumped 25.6 percent to 8.8 trillion rupees. RIL’s raw materials expenses decreased 7.9 percent year-over-year in the fourth quarter against a 2.1 percent year-over-year increase in its net sales.

The company attributed this to lower revenues from its O2C (oil-to-chemicals) business due to the sharp drop in crude oil prices and lower prices for finished products such as transportation fuels and petrochemical products.

However, declines in raw material prices boosted RIL’s operating margins, which led to strong double-digit growth in earnings before interest, depreciation, tax, and amortization (Ebitda) during the quarter.

Operating margin, or the company’s Ebitda margin, rose nearly 300 basis points year-over-year to 18.9 percent of revenue in the fourth quarter of fiscal second year, the highest in the past five quarters. RIL’s net profit got a boost from a decrease in tax expenses.

The company’s expenses on corporate tax, including deferred tax, fell by 36.5 per cent year-on-year to Rs. 2,787 crore in the fourth quarter of FY23 from Rs. 4,390 crore in the corresponding quarter of last year and to Rs. 5,266 crore in the third quarter of the year. Finance 23.

This was largely due to a sharp drop in deferred tax, which fell to Rs 3,525 crore in the fourth quarter from Rs 8,849 crore a year earlier.

The company said profits would have been higher even if a special surcharge (SAED) on the export of transportation fuel had not been imposed in July last year.

The additional taxes hit RIL’s net profit by Rs.711 crore during the fourth quarter, according to the company.

However, on the downside, RIL’s total interest expense increased by 63.6% YoY to Rs.5,819 crore and was equal to 14.1% of the company’s operating profit in Q4FY23, the highest in the past eight quarters. For comparison, it was 10.5 percent last year and 13.5 percent in the third quarter of fiscal ’23. The company attributed this to higher interest rates and loan balances.

RIL’s total debt increased by 18.2 per cent YoY to Rs 3.15 trillion while its net debt increased by 216.6 per cent YoY to Rs 1.1 trillion at the end of Q4 FY23. However, net debt was largely unchanged on Quarterly basis.

RIL’s three main operating divisions – O2C, Retail (Reliance Retail) and Communications (Reliance Jio Platform) – reported double-digit operating and net profit growth for the quarter. This will be welcomed by the markets and shareholders. However, the slowdown in revenue growth and the steady rise in interest expense remains a concern.