Reliance Companies by Profitability: Who Leads and Who Lags?

Reliance truly lives by the tagline of its telecom business “Kar lo duniya mutthi mein”.

From starting with a yarn trading business with just ₹500 to now reaching a market cap of ₹17.72 lakh crore, Reliance’s journey is one of the ultimate business transformation stories. Under Mukesh Ambani’s leadership, Reliance Industries Ltd. has redefined ambition and has become India’s largest private sector company today.

Know in-depth about the rankings of Reliance companies by market cap.

Reliance Industries Limited (RIL) and its subsidiaries operate in a wide range of industries, such as telecommunications, media, financial services, infrastructure, and many more.

But what happens when we zoom in and break down their profitability?    

In this article, you will understand the profitability of various Reliance (Mukesh Ambani Group) companies based on gross margin, operating margin, and net profitability. From sky-high profit margins to some surprising underperformers, you will know about the successful as well as the struggling companies of the group.

Table of Contents:

• Gross Margin
• Operating Margin
• Net Margin
• Reliance Industries Ltd.
• JIO Financial Services Ltd.
• Network 18 Media & Investments Ltd.
• Just Dial Ltd.
• Hathway Cable & Datacom Ltd.
• Den Networks Ltd.
• Reliance Industrial Infrastructure Ltd.
• Hathway Bhawani Cabletel & Datacom Ltd.
• GTPL Hathway Ltd.

Note: All the mentioned financial data (market cap, profit, net margin, sales, gross margin, and operating margin) of the companies below are for FY2024.

Firstly, let’s learn about the top 3 performers of the Reliance Group through 3 different financial measures: gross margin, operating margin, and net margin. Let’s break it down aspect by aspect.

Gross Margin

Think of gross margin as the appetiser in the profitability meal. It shows how much revenue remains after accounting for its business costs.

Imagine you run a cafe, and you sell a dish for ₹300. The ingredients to prepare the dish cost you ₹120. Your gross profit for that dish is ₹180. So, the gross margin is the percentage of the selling price that remains after you subtract the cost of ingredients.

Hence, you’ll be left with = (₹180/₹300)x100 = 60%

In short, gross margin tells you how well your business is at turning sales into profit after covering the cost of the raw materials and ingredients. The higher the margin, the more profit you’re making from each sale.

Coming back to the Reliance companies, below are the leaders with respect to this metric:

Operating Margin

The operating margin indicates how much profit a company makes from each rupee of sales after covering its production costs (such as wages and raw materials) before paying taxes or interest.

A higher operating margin generally reflects greater efficiency in generating profits from sales.

To better understand, imagine:
You run a small bakery that sells a cupcake for ₹50. The ingredients to make one cupcake cost ₹20 (flour, sugar, eggs, and baking powder). After subtracting these direct costs from the selling price, you are left with ₹30 per cupcake. This ₹30 represents a 60% operating margin.

Essentially, it’s the portion of the sales price that remains after covering all the direct costs, such as the cost of ingredients and wages, but before accounting for interest and taxes.

For this metric, the standout performers of Reliance are:

Net Margin

In simple terms, net profit is the remaining amount a company keeps after paying for all its costs, such as:

• Operating expenses
• Taxes
• Interest payments

It highlights what portion of the company’s revenue converts into real profit. It is considered to be one of the most important indicators to measure a company's financial health. Simply, it reveals the true profitability after all expenses.

Understand net profit with the example of a food delivery agent:
Imagine the agent earns ₹1,200 in a day by completing multiple deliveries. Out of this, ₹300 goes toward fuel costs, ₹200 for bike maintenance, and ₹400 for loan EMIs on the bike. After accounting for all these expenses, the agent is left with ₹300. This ₹300 represents the net profit— the actual money left after covering all expenses.

Here are the top 3 Reliance subsidiaries in terms of net margin and the factors driving their profitability:

Note: All the financial figures mentioned in the companies below are taken from Finology Ticker.

Let’s now understand all the mentioned companies of Reliance in detail!

Reliance Industries Ltd. (RIL)

Established in 1957 under the visionary leadership of Dhirubhai Ambani, Reliance Industries is at present ruling the Indian business sector in terms of MCap. Together with its subsidiaries, Reliance Industries is collectively known as "the group," symbolising its expansive reach and diversified operations.

• Market Cap: ₹17,52,645.28 crore
• Profit: ₹69,621 crore
• Net Margin: 7.73%
• Sales: ₹9,01,064 crore
• Gross Margin: 35%
• Operating Margin: 18%

RIL contributes an astonishing 97.25% of total profits in the overall group, solidifying its position as the primary driver of profit generation. This dominance can be reflected in its well-diversified revenue streams across sectors like petrochemicals, refining, oil and gas exploration, retail, telecommunications, and digital services.

Its ability to adapt and thrive across multiple industries is proof of its strategic approach to business and efficient use of resources.

Think of RIL as the “Dhoni of the Reliance Group”— consistent, strategic, and keeps on delivering the best possible under pressure.

Wanna know about the listed Reliance companies that are delivering their best, check out the detailed list in “Mukesh Ambani’s Listed Reliance Companies: An Overview”.

JIO Financial Services Ltd. (JFSL)

JFSL, originally founded on 22 July 1999 as Reliance Strategic Investments Ltd., has undergone significant evolution over the years.

It provides a wide range of financial services, enabling customers to borrow, save, invest, and manage finances through offerings like loans, savings accounts, UPI payments, insurance, and more.

Here are the MCap, sales, margin, and other financials of the company:

• Market Cap: ₹2,14,010.38 crore
• Profit: ₹1,604.55 crore
• Net Margin: 86.55%
• Sales: ₹1,853.88 crore
• Gross Margin: 100%
• Operating Margin: 84%

JIO Financial's focus on high-margin financial products contributes to its leading position, showcasing its significant cost efficiency in relation to revenue generation.

With its notable net margins, JIO Financial Services highlights the scalability and profitability of its financial offerings. It outperforms competitors with an operating margin of 84% and a net margin of 86.55%, highlighting its strategic focus on high-margin services.

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Network 18 Media & Investments Ltd.

Established on 16 February 1996, Network 18 Media, also known as the ‘Network18 Group’, has become a key player in India's media and entertainment industry.

Acquired by Reliance Industries Ltd. in July 2014, the company has expanded its footprint across television, digital content, e-commerce, and film production, solidifying its presence in diverse media sectors.

• Market Cap: ₹12,187.97 crore
• Profit: (-₹324.59) crore
• Net Margin: -3.49%
• Sales: ₹9,297.45 crore
• Gross Margin: 87%
• Operating Margin: -7.14%

The Network18 Group's current financial status reflects a challenging phase for the company in FY24. Despite an 87% gross margin, the company’s losses of ₹324.59 crore and operating margin stand at -7.14%, indicating cost management issues that supposedly have impacted its profitability.

The company is currently struggling, but with Reliance's backing, it might aim for a strong turnaround, saying to its competitors, “Picture abhi baaki hai mere dost.

Curious about where Reliance is headed next? Read about the “The Future of Reliance: A New Era of Growth or a Decline?” to understand what the future holds for this corporate giant.

Just Dial Ltd.

Since its foundation in 1996, Just Dial has become a synonymous name with local search services in India. Acquired by Reliance Retail Ventures Ltd., a subsidiary of RIL, in 2021, the company revolutionised the pre-digital era by connecting businesses and consumers effortlessly.

Over time, it has grown into a trusted household name for reliable information and quick assistance. With its “Search Plus” features, Just Dial has evolved beyond a simple directory, enabling users to conveniently handle various day-to-day tasks through a single app.

For both individual users and B2B companies, it provides valuable tools for promoting business and generating quality leads.

• Market Cap: ₹9,701.82 crore
• Profit: ₹362.93 crore
• Net Margin: 34.8%
• Sales: ₹9,709.05 crore
• Gross Margin: 100%
• Operating Margin: 20.18%

As of FY24, Just Dial has shown strong financial performance. The group maintains a solid gross margin of 100% and an operating margin of 20.18%, highlighting its effective cost control and profitability.

Confused by the profitability puzzle? Understand clearly whether high margins truly make a company worth your investment in our article “Should you Invest in Companies with a High Margin? - A Myth Buster”.

Hathway Cable & Datacom Ltd.

Founded in 1995, Hathway Cable and Datacom Ltd. has played a vital role in advancing India's digital infrastructure. The company’s cutting-edge broadband and cable services have expanded connectivity to thousands of homes and offices across 350 cities in India.

In 2018, Reliance, along with Den Networks, acquired Hathway Cable and Datacom Ltd., purchasing 51.34% of the stakes. Hathway has a strong market presence in Maharashtra, Karnataka, and Madhya Pradesh and holds over 52% of the cable broadband market among Multi-System Operators (MSO) in India.

• Market Cap: ₹3,237.52 crore
• Profit: ₹99.29 crore
• Net Margin: 5.01%
• Sales: ₹1,980.97 crore
• Gross Margin: 53.6%
• Operating Margin: 16.11%

The company continues to be a household name, especially in urban and semi-urban markets.

While its profit figure isn’t exceptionally high as compared to its competitors, such as Bharti Airtel Ltd. (₹8,600 crore) and Tata Communications Ltd. (₹949.59 crore), it demonstrates the company's ability to maintain positive earnings amidst intense competition and rising costs in the telecommunications and media sectors.

And a net margin of 5.01% highlights moderate profitability. This metric shows that the company retains ₹5 as profit for every ₹100 of sales revenue. While this margin is not industry-leading, it indicates operational efficiency and cost control in an environment marked by pricing pressures and high operational expenses.

Track Hathway Cable & Datacom Ltd.’s performance with access to its latest annual reports, quarterly results, balance sheet, and live price charts at Finology Ticker.

Den Networks Ltd.

Founded on 10 July 2007, Den Networks set out to revolutionise television and entertainment in India. In 2018, it became a part of Reliance Industries Ltd.’s portfolio, delivering digital entertainment to over 1.3 crore households across 433 cities in 13 major states. A ~75% subsidiary of RIL, Den Networks offers:

• Cable TV
• OTT services
• Broadband services

Den Networks holds the distinction of being India’s first MSO to launch an Over-The-Top (OTT) app and Video-on-Demand (VoD) services. Reliance’s acquisition of Den Networks was a strategic step to enhance its broadband and direct-to-home television offerings.

With Jio’s dominance in mobile data, Reliance aimed to capture the “fibre to the home” broadband market through JioGigaFibre. The acquisition enabled Reliance to connect 5 crore homes across 1,100 cities by collaborating with Den Networks, Hathway, and Local Cable Operators (LCOs). This partnership facilitated a cost-effective upgrade to JioGigaFibre and Jio Smart Home Solutions, leveraging the 2.4 crore existing cable-connected homes of these partners in over 750 cities.

• Market Cap: ₹2,156.57 crore
• Profit: ₹212.79 crore
• Net Margin: 19.69%
• Sales: ₹1,080.75 crore
• Gross Margin: 43.8%
• Operating Margin: -2.18%

The company’s valuation indicates investor confidence in the company’s potential to maintain relevance. Despite its notable revenue generation and net profit, the company's operational efficiency has faced challenges, reflecting mixed results.

However, its operating margin of -2.18% is a concerning indicator, revealing that Den Networks incurred losses at the operational level. This negative margin overshadowed its gross profitability of 43.8%.

If you’re thinking about different profitability ratios, then I’d say they’re essential tools for smart investing. But how to learn about them? Well, the answer is right here in this article, “Understanding Profitability Ratios”.

Reliance Industrial Infrastructure Ltd. (RIIL)

Established in 2006, the company has played a crucial role in supporting India’s rapid urbanisation and industrial growth by focusing on developing and operating industrial infrastructure projects.

With over three decades of experience, the company provides infrastructure facilities and support services. Its revenue and profitability are significantly generated from services provided to Reliance Industries Limited and its group companies.

• Market Cap: ₹1,805.88 crore
• Profit: ₹13.32 crore
• Net Margin: 22.93%
• Sales: ₹58.09 crore
• Gross Margin: 99.4%
• Operating Margin: -10.59%

In the current fiscal year, the company reported a revenue from transportation services of ₹3,349.88 lakh, slightly higher than the previous year’s ₹3,265.78 lakh. However, revenue from infrastructure support and other operating income declined to ₹2,458.75 lakh from ₹3,539.02 lakh, largely due to lower utilisation of infrastructure assets.

This decline was offset by reduced depreciation expenses, which fell to ₹260.92 lakh from ₹588.69 lakh, and an increase in other income, which rose to ₹2,461.18 lakh from ₹1,288.77 lakh, driven by higher average cash reserves and marketable securities.

The company remains committed to delivering infrastructure support services, including the transportation of petroleum products and raw water through pipelines, along with other services, primarily to Reliance Industries Limited.

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Hathway Bhawani Cabletel & Datacom Ltd.

Established in 1984, Hathway Bhawani Cables has been delivering high-quality visual content to households across the nation.

The company provides reliable cable TV services in Mumbai, Navi Mumbai, and Karjat, using cutting-edge fibre-optic technology in its digital cable TV network and distribution.

Adding to its portfolio, Hathway Bhawani also operates Hathway Bhawani Cinema and Movies (HB Cinema, HB Movies), a movie-centric entertainment channel that caters to diverse audiences.

In a strategic move, Reliance Industries invested ₹2,940 crore via a preferential issue to acquire a 51.3% stake in Hathway. This acquisition included open offers to minority shareholders of GTPL Hathway Ltd., in which Hathway holds a 37.3% stake. As a subsidiary of Hathway, Hathway Bhawani was also brought under Reliance’s umbrella, further enhancing its reach and market presence.

• Market Cap: ₹15.5 crore
• Profit: (-₹0.04) crore
• Net Margin: -1.6%
• Sales: ₹2.68 crore
• Gross Margin: 100%
• Operating Margin: 6.42%

Despite its small market cap, the company is continuing to serve its customer base with a steady focus on cable services. For FY24, the company reported sales of ₹2.68 crore, highlighting its ability to maintain operations in a competitive market.

However, profitability remains a challenge, with a net margin of -1.6% and a minor net loss of ₹0.04 crore. Bhawani Cabletel’s 100% gross margin highlights its strong revenue retention after direct costs, which positions it well for potential future growth with strategic initiatives.

Keep informed with Finology Insider— your one-stop destination for business news. Click here to explore!

GTPL Hathway Ltd.

GTPL Hathway Ltd. was established on 21 August 2006 in Ahmedabad, originally as “Gujarat Tele Link Private Limited” under the Companies Act, 1956.

• On 12 April 2013, the company's name being changed to “GTPL Hathway Private Limited”.
• On 23 August 2016, the company was converted into a public limited company.
• The company’s name was then changed to “GTPL Hathway Limited”.

It is India's largest MSO providing digital cable TV services and one of the leading private wireline broadband service providers. The company is the largest digital Cable TV and wireline broadband provider in Gujarat and a leading digital Cable TV provider in West Bengal. The company serves an estimated 1.2 crore households across 1500+ towns in 23 states in India.

As of 31 March 2024, GTPL Hathway has around:

• 95 lakh active Digital Cable TV subscribers
• 10 lakh broadband subscribers, with a broadband homepass of about 58 lakh

Its financial stats as of FY24 are:

• Market Cap: ₹1,665.8 crore
• Profit: ₹111.79 crore
• Net Margin: 3.48%
• Sales: ₹3,212.5 crore
• Gross Margin: 98.71%
• Operating Margin: 14.87%

The company has achieved a total sales revenue of ₹3,212.5 crore, showcasing its substantial scale in the digital cable TV and broadband sectors.

However, in comparison to its gross margin (98.71%) and operating margin (14.87%), the low net margin indicates that the company may face higher costs at the net level, including taxes, interest, or other non-operating expenses. This could point to potential inefficiencies or pressure on profitability from external factors, such as other operational costs.

The Bottom Line

Let me give you an overall summary, Reliance Industries Limited (RIL) remains the flagship of profitability, with its diversified revenue streams and operational efficiency. On the other hand, Network 18 Media, Den Networks, and Reliance Industrial Infrastructure are facing operational hurdles.

In short, the Reliance group is experiencing a mix of profitability, with some of its companies being blockbuster performers while a few others are struggling ventures.

Join the Conversation!

Which Reliance subsidiary's performance surprised you the most—either positively or negatively? And who do you think will emerge as the next profitability champion in the Reliance group?

Share your thoughts in the comments on how Reliance can effectively handle these highs and lows.

*Disclaimer: The stocks, companies, and policies discussed above aren't recommendations from Finology Insider and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making investment decisions.