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RIL Q3 Results: Profit grows 13.5% to Rs 11,640 cr, GRM at $9.2/bbl; Jio ARPU beats estimates

Reliance Jio has reported average revenue per user (ARPU) at Rs 128.4 for the quarter against Rs 120 in previous quarter and Rs 130 in Q3FY19.

January 20, 2020 / 05:29 PM IST

Reliance Industries, the country's largest company by market capitalisation, has registered a 13.5 percent year-on-year growth (3.35 percent QoQ) in third-quarter consolidated profit at Rs 11,640 crore, driven by strong growth in consumer businesses (telecom and retail). It was also supported by lower tax cost and higher other income.

The poll of analysts conducted by CNBC-TV18 had estimated profit at Rs 11,333 crore for the quarter.

Consolidated revenue from operations in Q3 rose 2.5 percent QoQ to Rs 1.57 lakh crore, but the same fell 2.5 percent YoY.

"Decrease in revenue YoY is primarily on account of 10.6 percent decline in oil-to-chemicals (O2C) business revenues, with lower product price realization and 6.6 percent fall in Brent crude price. This was partially offset by continuing growth momentum in consumer businesses," the company said in its BSE filing.

Gross refining margin (GRM) for the quarter came in at $9.2 a barrel, which was in line with the poll of analysts conducted by CNBC-TV18, against $8.8 a barrel in Q3FY19 and $9.4 a barrel in Q2FY20.

Refining margins weakened QoQ on the back of steep declines in fuel oil cracks from the upcoming IMO spec change and lower-middle distillate cracks more than offsetting the gains in light distillate cracks, company said.

RIL maintained significant premium over Singapore complex margins with product yield optimization to take advantage of firm middle distillate cracks and robust risk management, it added.

During Q3FY20, the benchmark Singapore complex margin averaged $1.6 per barrel as compared to $6.5 per barrel in Q2FY20 and $4.3 per barrel in Q3FY19.

Refining business grew by 6.7 percent sequentially (down 7.2 percent YoY) to Rs 1.03 lakh crore, but petrochemical segment reported a 4.2 percent decline QoQ (down 19.1 percent YoY) at Rs 36,909 crore for the quarter due to lower price realizations across product categories.

"The third-quarter results for our energy business reflects the weak global economic environment and volatility in energy markets. Within our O2C chain, downstream petrochemicals profitability was impacted by weak margins across products with subdued demand in well-supplied markets," Mukesh Dhirubhai Ambani, Chairman and Managing Director said.

"Refining segment performance improved in a difficult operating environment given our continuous focus on cost positions, high operating rates and product placement," he added.

Refining segment's earnings before interest and tax (EBIT) grew by 14.1 percent quarter-on-quarter (up 11.9 percent YoY) to Rs 5,657 crore and margin increased 40bps QoQ and 100bps YoY to 5.5 percent for Q3FY20.

On the petchem front, EBIT fell sharply by 22.7 percent QoQ (down 28.5 percent YoY) to Rs 5,880 crore and margin contracted to 15.9 percent (from 19.7 percent in Q2FY20 and 18 percent in Q3FY19).

Reliance Jio, the country's largest company by market share and subscriber base, reported a whopping 36.4 percent sequential growth in Q3 profit at Rs 1,350 crore on revenue of Rs 13,968 crore, which grew 6.4 percent QoQ.

The profitability of telecom operator was lower than the poll of analysts conducted by CNBC-TV18 (which was pegged at Rs 1,500 crore). It was impacted by Rs 177 crore on account of AGR dues.

At the operating level, its earnings before interest, tax, depreciation and amortisation (EBITDA) increased 8.4 percent quarter-on-quarter to Rs 5,601 crore and margin expanded by 80bps to 40.1 percent in Q3FY20.

Jio's average revenue per user (ARPU) for the quarter stood at Rs 128.4, higher by 7 percent over Rs 120 in September quarter. It was also ahead of analyst estimates of Rs 124-125.

The telecom operator added 14.8 million subscribers during the quarter against 23.9 million users addition seen in previous quarter, taking its total subscriber base to 370 million at the end of December quarter.

Reliance Retail continued to report stellar growth for the quarter as revenue grew by 27.4 percent YoY (up 10 percent QoQ) to Rs 45,327 crore with accelerated store roll-out and strong LFL sales.

"Revenue growth was led by robust 35.7 percent YoY growth in consumer electronics, fashion & lifestyle and grocery segments," the company said.

"The company saw consistent same-store sales growth and record footfall across our stores driven by our compelling proposition of great shopping experience and superior value," Mukesh Ambani said.

Retail's EBIT at Rs 2,389 crore showed a massive 58 percent YoY growth (up 17.4 percent QoQ) and margin grew by 110bps YoY (up 40bps QoQ) to 5.3 percent for the quarter ended December 2019.

Consolidated EBITDA during the quarter increased 1.1 percent to Rs 22,386 crore QoQ and margin contracted 20bps QoQ to 14.6 percent in Q3FY20, but both were ahead of CNBC-TV18 poll which was pegged at Rs 22,313 crore and 14 percent respectively.

Mukesh Ambani said the company was making good progress on the value unlocking initiatives announced earlier while building on sustainable growth platforms for shareholders.

Outstanding debt of the company was Rs 3,06,851 crore at the end of December 2019, compared to Rs 2,87,505 crore as on March 31, 2019.

RIL stock has risen 13.6 percent during the third quarter and has rallied 36 percent in the last year amid asset monetisation news and strong growth in the telecom business.

Disclaimer: Reliance Industries Ltd, which also owns, is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

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first published: Jan 17, 2020 07:03 pm