In the digital services business, the firm reported a net addition of 14.3 million customers within the June quarter Reliance Industries Ltd’s June-quarter performance was well supported by its digital services and oil-to-chemicals (O2C) business, although the retail business was impacted by regional lockdowns.
The O2C business reported sequential growth of seven in Ebitda, despite the impact of the second covid wave. This was the fourth straight quarter of growth after the primary wave Though domestic demand for fuel and downstream chemicals was hit by lockdowns, operating performance was helped by firm petrochemical margins and improving refining margins. The domestic volume decline in petrochemicals was significantly compensated by exports.
“The O2C segment was relatively resilient and segment Ebitda further increased. aside from higher volumes (throughput up 2% sequentially), we estimate that refining margins would even be marginally better,” said analysts at Nomura Global Equity Research during a post-results note.
In the digital services business, the entire customer base of 440.6 million as of June meant that there was a net addition of 14.3 million customers in Q1. the corporate also managed to take care of a stable average revenue per user (Arpu) of ₹138.
“Despite the impact of the second covid wave, Reliance Jio held its ground after the push from the JioPhone launch in Q4FY21,” said analysts at Motilal Oswal Financial Services Ltd How the Sebi-mandated one-stop-shop for mutual funds will work
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Analysts remain positive on forward prospects for the digital services business. “With continued market share gains, fiber-to-the-home/enterprise ramp-up, strategic tie-ups, in-house 5G capabilities, increased spectrum footprint and digital ecosystem roll-out, the outlook remains strong,” said analysts at Nomur
The retail business, however, did feel the warmth of the pandemic, impacting footfall and hence revenue at stores. Footfall was 46% of pre-covid levels. Though grocery sales were firm, they might not prevent a 46.1% sequential decline within the segment’s Ebitda.
Nevertheless, rising e-commerce activities bode well. JioMart (grocery + horizontal) saw a 25% sequential increase within the number of orders with 75% repeat orders and has expanded to 218 cities, means analysts. Kirana partnerships increased 33% sequentially. Reliance Digital (electronics) clocked its best-ever quarter and an improvement in metrics, said analysts at JP Morgan Asia Pacific Equity Research in their report.
Investors will anticipate to the launch of the low-cost 4G smartphone in September, which is predicted to assist accelerate the expansion of Jio’s subscriber base.
The finalization of deal terms with Saudi Aramco for the O2C segment might be another trigger for the stock.
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