Written By Mukesh Ambani’s Reliance Industries Ltd. has exceeded profit forecasts, thanks to growth in its retail and energy divisions. The company has been expanding its digital business and focusing on domestic consumption as India emerges from the COVID-19 pandemic.
According to the company’s earnings report, Reliance’s net profit for the quarter ending December 31, 2021, was 17.59 billion rupees ($236.58 million), beating analysts’ estimates of 14.97 billion rupees. This is the company’s fourth straight quarterly profit.
The energy division, which includes oil refining and petrochemicals, was the main contributor to the company’s profits, with revenue rising 45% year-on-year to 1.69 trillion rupees. The retail business, which includes grocery stores and e-commerce operations, saw revenue rise 32% year-on-year to 307.72 billion rupees.
Reliance’s telecom business, Jio, added 12.6 million subscribers in the quarter, bringing its total subscriber base to 443.4 million. The company’s digital business, which includes Jio and e-commerce platform JioMart, saw revenue rise 31% year-on-year to 321.73 billion rupees.
Analysts say that Reliance’s performance is a sign that the company’s shift from traditional businesses to new ventures such as e-commerce and telecom is paying off. “Reliance is using its deep pockets and scale to execute a business model that is taking on some of the world’s largest companies,” said Pranav Kumar, a portfolio manager at US-based investment firm Marathon Asset Management.
Reliance’s success comes at a time when India’s economy is struggling to recover from the pandemic. The country’s GDP contracted by 7.5% in the last fiscal year, and the government has been slow to introduce economic reforms. The central bank has cut interest rates to record lows in an attempt to stimulate growth, but inflation remains high.
Reliance has been investing heavily in new businesses to offset the impact of the pandemic. In 2020, the company raised more than $27 billion by selling stakes in Jio Platforms and Reliance Retail Ventures to investors including Facebook, Google, and Silver Lake. The funds were used to pay off debt and invest in new businesses.
Reliance has also been expanding its presence in the renewable energy sector. The company plans to invest $10 billion over the next three years to build solar, wind, and hydrogen power plants, as it seeks to reduce its reliance on fossil fuels.
However, analysts warn that Reliance’s success could be temporary, and that the company faces challenges as it seeks to expand its digital business. “Reliance is facing increasing competition from global players such as Amazon and Walmart in the e-commerce space,” said Jigar Shah, CEO of financial services firm Maybank Kim Eng Securities India. “The company will need to continue to innovate and invest in new technologies to maintain its edge.”
Overall, Reliance’s performance shows that the company’s strategy of diversifying into new businesses is paying off, and that it is well positioned to take advantage of India’s emerging digital economy. As the country continues to recover from the pandemic, Reliance’s success could provide a boost to India’s overall economic growth.
