5 Takeaways From Reliance’s Q3: Jio 5G Expansion, Digital Retail Boom, Rise Of JioCinema & More

Mukesh Ambani-led Reliance Industries Ltd (RIL) saw a double-digit growth in consolidated revenue and EBITDA for the December quarter (Q3 FY23) on the back of improvement in its core petrochemical and oil-to-chemical businesses, and record levels of footfall and revenue on the retail and telecom side.

Growth was healthy for RIL, Reliance Retail and Reliance Jio Platforms across categories, with the push for 5G expected to bring in a massive revenue bump in the next few quarters.

Digital services and retail segments for instance recorded double-digit growth in Q3 FY23, while JioCinema stood out among the OTT players with marquee properties.

The addition of new stores on the retail front and rising contribution from digital channels such as JioMart, Ajio and others also supported the all-time-high EBITDA for the quarter.

On a consolidated basis, RIL’s profit after tax (PAT) increased only by 0.6 % year-on-year to INR 17,806 Cr for Q3 FY23. The consolidated gross revenue for the quarter stood at INR 2.4 Lakh Cr (14.8 % higher YoY), while EBITDA grew by 13.5 % YoY to INR 38,460 Cr

Ahead of its earnings announcement, Reliance’s shares closed 1.15% lower on the BSE and finished at INR 2,442.70 apiece at the end of the week.

Jio Platforms Sees Record Revenue

Jio’s parent and the digital umbrella company Reliance Jio Platforms recorded double-digit growth with highest-ever revenue and EBITDA on a quarterly basis. The company said higher realisations from digital services drove JPL’s consolidated revenue growth.

Jio Platforms’ EBITDA increased by 25.1% compared to Q2 FY22 to INR 12,519 Cr led by revenue growth and margin improvement. However, much of the profit and revenue has come from Reliance Jio’s telecom business.

Jio Subscriber Base, ARPU Grows

The telecom arm of the conglomerate reported a net profit of INR 4,638 Cr in the quarter ending December 31, 2022 (Q3FY23) on the back of NR 22,998 Cr as revenue. In Q2 FY23, the company had reported net profit of INR 4,518 Cr and revenue of INR 22,521 Cr.

Jio’s PAT surged by 28.29% compared to a profit of INR 3,615 Cr in the same quarter last year. EBITDA in the current quarter stood at INR 12,011 Cr, or 52.2% of the revenue, in line with the sector performance for the quarter.

The average revenue per user or ARPU for Q3 came up to INR 178.2 compared to INR 177.2 in Q2 FY23, and significantly higher than the INR 151.6 in the same quarter in FY22.  Jio’s customer base grew to 432.9 Mn as of December 2022, up from 427.6 Mn in Q2 FY23 and 421 Mn in Q3 FY22.

Pan-India 5G Rollout In The Works

During the quarter, the biggest development for Reliance Jio was the extended launch of 5G services, which the company claimed is available in 134 cities across 22 states and union territories of India. Pan India 5G rollout will be completed by December 2023, Jio claimed.

Reliance Jio Infocomm chairman Akash Ambani said the company would be looking to install JioFiber and JioAirFiber at over 100 Mn premises powered by the 5G network.

Reliance Retail’s Q3 Boom

When it comes to the retail business, Reliance Retail’s ecommerce arm JioMart added 71% more products in the quarter compared to the September quarter, while the seller base grew by 83% in the same period.

Fashion ecommerce platform AJIO also expanded its customer base by 33% when compared to the previous year, with its catalogue size growing by 62%.

RIL said grocery digital commerce business saw steady revenue growth on the back of festive demand and the expansion of MilkBasket in new cities. Grocery new commerce revenue growth was driven by new merchant onboarding and efficient supply chain, which resulted in superior delivery capabilities for merchant partners.

“Festive offers during Diwali, Prathmasthami and Christmas gained traction with customers resulting in higher conversions and bill values. Acquisition of Sosyo, Lotus Chocolate and launch of Independence brand will further strengthen the portfolio,” said Isha Ambani, the head of the retail business.

Reliance-owned Zivame’s lingerie business saw a revenue growth of 62% YoY across the brand portfolio thanks to the entry of new products in the shapewear and underwear category.

Omnichannel furniture retailer Urban Ladder saw a revenue growth of 21% YoY with growth in store performance and digital platforms capitalising on seasonal sales. The business launched end-to-end interior design solution during the period

On a consolidated basis, Reliance Retail recorded its highest ever quarterly revenue mark and EBITDA with 201 Mn footfalls across formats, another record. Net profits grew by 6.2% compared to Q3 FY22 to INR 2,400 Cr with double-digit growth in both GMV and operating income.

The EBITDA from operations saw a major 32.2% jump to INR 4,657 Cr driven by a favourable mix across categories and formats, operating leverage and efficiencies

Revenue increased by 18.6% YoY to INR 60,096 Cr in Q3, with grocery business grew 65%, fashion and lifestyle grew 13% and consumer electronics (excluding devices) grew 45%, all on a YoY basis.

The company added that when it comes to premium brands, the business saw a 38% growth Y-o-Y led by higher footfalls and new store openings. On the premium front, Reliance Retail also launched websites for Tumi, Hunkemoller and Pottery Barn in the quarter to bulk up its omnichannel strategy.

JioCinema Bright Spark In Dull Media Business

When it comes to the digital media business, JioCinema saw the biggest boost thanks to the 2022 FIFA World Cup in November and December. Reliance added that Jio Platforms Limited companies powered the technology behind streaming of the World Cup on JioCinema which achieved a total viewership of over 114 Mn. Around 80% of the total viewership was on mobile devices, and daily active users (DAU) peaked at 34 Mn during the final, the highest DAU across OTTs in India during 2022.

Peak traffic utilisation was 2.1 TBPS during the final which was again the highest in India across OTTs. So these are definitely highlights for the new JioCinema bet that Reliance will be looking to double down on in 2023 with the IPL and the Women’s IPL.

The media business has recorded consolidated gross revenue of INR 2,166 Cr for the quarter, 12.5% higher YoY, primarily driven by movies and sports business, despite a drop in ad revenue.

However, the EBITDA declined as a whole by 86.7%, which just shows how severely brands have curbed advertising spends. Advertising demand and advertising revenue of all segments was down on a YoY basis, Reliance added.

Besides this, there was more bad news on the profitability front, due to investments in new initiatives, digital entertainment and sports, a negative contribution of around INR 140 Cr to the EBITDA.

However, the company claimed that it would continue to invest heavily in the media business, particularly on the digital side.

“With IPL coming up, for which Viacom18 has exclusive digital rights, ramping up of the digital platform has been a key focus area. FIFA was the first major sports property on the network and a stepping-stone in this development phase. We are investing to drive digital user acquisition and engagement with technological innovations,” Reliance said in its Q3 FY23 financial report.