RIL's other income rises substantially in Q4: SMC Global
Reliance Industry quarterly results - results for the Q4 FY 12 have been in-line of the estimates.
April 21, 2012 / 10:35 IST
By Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities Limited.
Reliance Industry quarterly results1. The Reliance Industries results for the Q4FY12 have been in-line of the estimates.2. While most of the parameters have been in-line of the estimates, there is definite positive surprise on the GRM (Gross Refining Margins). While the estimate of GRM was below US$ 7 per barrel, the company has posted GRM of US$ 7.6 per barrel. That’s definitely positive during this quarter.3. One more interesting aspect of the financials is the "Other Income" segment. The relevance of "Other Income" has been substantially increasing with each passing quarter. The company has huge cash pile of about Rs 70,252 Crores. This is resulting into huge "Other Income" on the ample cash balances on the balance sheet of about Rs 2,295 Crores.4. Just to put the things in perspective regarding the growing significance of "Other Income" in the performance of Reliance, would like to mention a quick statistic. Profit Before Tax of the company is about Rs 5,431 Crores and "Other Income" is about Rs 2,295 Crore. That means, about 42% of Profit Before Tax is coming from the "Other Income". I can't think of any other company of the size of Reliance who gets such a massive proportion of Profit from "Other Income".5. To put in other words, the "core business" of the company is contributing just about 58% of the Profit Before Tax and the "Other Income" is contributing about 42% of the Profit Before Tax.6. To summarize, Reliance is making more and more money out of money, less and less money out of oil.7. Probably, it is high time that the company has to clearly pronounce the cash deployment plan regarding how are they going to use Rs 70,252 Crores. Else, this factor may remain to be huge overhang on the performance of the stock.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
