Reliance Industries tops India’s profitability chart for FY24

Most Profitable Companies in India for FY24

Reliance Industries Limited (RIL) has emerged as the most profitable company in India for the financial year 2023-24, with a net profit of Rs 79,020 crore. This remarkable performance solidifies its position at the top of the corporate profitability rankings in India. Following closely is HDFC Bank Limited, which reported a net profit of Rs 65,446 crore, and State Bank of India (SBI), with a net profit of Rs 61,077 crore. These figures highlight the significant contributions of these companies to the Indian economy.

Comparative Profitability Analysis

The following table provides a detailed comparison of the net profits of the top ten most profitable companies in FY24:

FY24 Financial Performance of Reliance Industries

Reliance Industries, led by Mukesh Ambani, achieved substantial growth across its various business segments. The company’s gross revenue for FY24 stood at Rs 1,000,122 crore, representing a 2.6% year-on-year increase. This growth was driven by continued momentum in its consumer businesses and upstream operations. Notably, Reliance Jio Platforms Limited (JPL) saw a revenue increase of 11.7% year-on-year, supported by robust subscriber growth of 42.4 million across mobility and home services, coupled with improvements in Average Revenue Per User (ARPU). Additionally, Reliance Retail Ventures Limited (RRVL) experienced a 17.8% year-on-year growth in revenue, driven by strong performance across all consumption baskets, the addition of 15.6 million square feet of gross area, and record footfalls exceeding one billion.

However, the company’s Oil-to-Chemicals (O2C) segment faced challenges, with a 5.0% decline in revenue primarily due to lower product price realisation following a 13.5% year-on-year decline in average Brent crude oil prices. Despite this, higher volumes partially offset the impact. The Oil & Gas segment saw a significant revenue increase of 48.0%, driven by higher volumes from the KG D6 block, despite lower gas price realisation from the same field.

EBITDA and Other Key Metrics for FY24

Reliance Industries’ Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) increased by 16.1% year-on-year to Rs 178,677 crore. This growth was bolstered by positive contributions from all key operating segments. JPL’s EBITDA increased by 12.8% year-on-year due to higher revenue and margin improvement. Similarly, RRVL’s EBITDA saw a sharp increase of 28.5% year-on-year, with a 60-basis points expansion in margins to 8.4%. The O2C segment’s EBITDA remained resilient despite a challenging margin environment, and the Oil & Gas segment’s EBITDA increased by 48.6% year-on-year, driven by higher gas and condensate production following the commissioning of the MJ field.

The company’s depreciation expenses rose by 26.1% year-on-year to Rs 50,832 crore due to an expanded asset base across all businesses, higher network utilisation in the Digital Services business, and increased upstream production. Finance costs also increased by 18.1% year-on-year to Rs 23,118 crore due to higher liability balances and elevated market interest rates. Tax expenses grew by 26.2% year-on-year to Rs 25,707 crore, partly due to the utilisation of tax credits in the previous financial year.

Turnaround of Tata Motors in Tata Group

The financial turnaround of Tata Motors has significant implications for Tata Sons, the holding company of the Tata Group. Tata Motors reported a consolidated net profit of Rs 17,483 crore for Q4 FY24, which is a remarkable 213.7% increase from Rs 5,573.8 crore in the previous year. This performance allowed Tata Motors to surpass Tata Consultancy Services (TCS) in quarterly profitability for the first time in a decade.

Despite this, TCS remains the most profitable company within the Tata Group on an annual basis, with a consolidated net profit of Rs 46,585 crore for FY24. Tata Motors’ financial recovery is crucial for Tata Sons, as the holding company has invested Rs 22,658 crore in equity in the automotive player, accounting for 36.5% of its equity investments in listed group companies. A financially robust Tata Motors enables Tata Sons to allocate resources towards emerging ventures such as electronics manufacturing, e-commerce, and aviation. The group’s diversified portfolio, including the steady performance of TCS and the resurgence of Tata Motors, highlights the potential for robust returns on Tata Group stocks in the coming years.

Conclusion

Reliance Industries’ position as the most profitable company in India for FY24 underscores its robust financial performance and strategic investments across various sectors. The impressive growth of other major players, such as HDFC Bank and SBI, further highlights the dynamic and competitive landscape of India’s corporate sector. As these companies continue to innovate and expand, they play a crucial role in driving the nation’s economic growth. Investors and analysts alike will be keen to monitor these developments and their implications for future profitability and market performance.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.