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Last Updated : Oct 18, 2019 09:33 PM IST | Source: Moneycontrol.com

RIL Q2 profit beats estimates; 10 key takeaways from quarterly result

Company's other income during the quarter increased by 14.88 percent QoQ to Rs 3,614 crore and the same shot up 189 percent year-on-year.

 
 
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Reliance Industries, the country's most valued company by market capitalisation, reported highest every quarterly consolidated profit in September quarter, driven by refining, telecom and retail segments. Higher other income and lower tax cost also boost the bottom line.

The stock gained 1.37 percent to end at record closing high of Rs 1,415.30 on October 18, ahead of September quarter results and crossed market capitalisation of Rs 9 lakh crore intraday, becoming the most valued listed company in India.

It rallied 6 percent during the quarter ended September 2019 while it surged 26 percent year-to-date.

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Here are 10 key takeaways from Q2 earnings:

Profit

Mukesh Ambani-led Reliance Industries registered an 18.34 percent year-on-year growth in second-quarter consolidated profit to Rs 11,262 crore. The sequential increase was 11.46 percent.

Commenting on the results, Mukesh Ambani, Chairman and Managing Director said," The Company has reported record net profit for the quarter. These excellent results reflect the benefits of our integrated Oil to Chemicals (O2C) value chain and the rapid scale-up of our Consumer businesses. During this quarter, our O2C businesses gained from favourable fuel margins environment, feedstock sourcing flexibility and higher petrochemicals volumes."

Also Read: Highest ever quarterly profit of Rs 11,262 cr

Revenue

Consolidated revenue during the quarter increased 3.63 percent to Rs 148,526 crore compared to the year-ago period, but the same declined 5.4 percent on a sequential basis.

Increase in revenue YoY is primarily on account of robust growth in retail & digital services businesses which grew by 27 percent and 43 percent, respectively. This was partially offset by decrease in refining and petrochemicals segment revenue with 17.7 percent fall in Brent crude price.

Operating Income

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 3.9 percent sequentially to Rs 22,152 crore and margin expanded by 130bps QoQ to 14.91 percent in the quarter ended September 2019.

Gross Refining Margin

Reliance Industries reported gross refining margin at $9.4 a barrel for the quarter, against $8.1 a barrel in June quarter and $9.5 a barrel in September quarter last year. It was lower than a CNBC-TV18 poll of analysts which was pegged at $9.5 a barrel.

"Refining margins improved QoQ on the back of strengthening light and middle distillate and FO cracks," company said.

The benchmark Singapore Complex Margin averaged $6.5 a barrel in Q2FY20 as compared to $3.5 a barrel in Q1FY20 and $6.1 a barrel in Q2FY19, it added.

Refining Business

Refining business, which contributed 65 percent of total operating revenue, registered a 4.4 percent sequential degrowth to Rs 97,229 crore during the quarter, but its EBIT grew 10 percent and margin increased by 70 bps QoQ.

The same degrew by 1.6 percent year-on-year due to lower crude prices and EBIT decreased by 6.9 percent YoY to Rs 4,957 crore mainly due to marginally lower GRM and narrow light-heavy crude differentials.

Petrochemical Segment

Petrochemical segment revenue grew by 2.5 percent quarter-on-quarter to Rs 38,538 crore and at an operating level, the EBIT increased 1.3 percent but margin contracted 30 bps QoQ in September quarter.

The segment de-grew year-on-year by 11.9 percent reflecting fall in prices of petrochemical products, the company said. EBIT decreased by 6.4 percent YoY mainly due to weaker petrochemical product margins offset by record petrochemical production and cost optimization through light-feed cracking.

"There was a significant decline in margins for major products – MEG (-53 percent), PX (-37 percent), PE (-25 percent) and PP (-21 percent) as a result of new capacity, inventory overhang and global demand slowdown, " the company said.

Reliance Jio

Jio registered a healthy 11.1 percent sequential growth in the second-quarter profit at Rs 990 crore on revenue of Rs 12,354 crore that increased by 5.8 percent QoQ, boosted by Diwali plan.

Reliance Jio has become India's largest mobility services provider, and also has the highest market share in terms of 4G subscriber base and 4G data traffic in India, Mukesh Ambani said.

"Jio is still adding more than 1 crore new customers every month and is now geared to kick-start other growth engines," he added.

Its total subscriber base increased by 7.2 percent QoQ to 355.2 million at the end of September quarter after adding 24 million users during the quarter (against 24.5 million addition in Q1FY20).

"JioPhone Diwali 2019 plan (marketed by Reliance Retail) offering the device at Rs 699 (without an exchange of old device) has witnessed a strong response in first few weeks," Reliance said in its BSE filing.

Jio's EBITDA grew by 10.2 percent sequentially to Rs 5,166 crore and margin increased 170bps to 41.8 percent in the quarter ended September 2019. The average revenue per user for the quarter stood at Rs 120 against Rs 122 in June quarter.

Reliance Retail

Reliance Retail delivered robust performance with record quarterly revenues and EBITDA in Q2, Mukesh Ambani said.

Company's organised retail segment reported a 7.87 percent QoQ growth (up 27 percent YoY) in revenue at Rs 41,202 crore and 13.32 percent increase QoQ (up 67 percent YoY) in EBITDA at Rs 2,322 crore for the quarter. Its EBIT grew by 14.5 percent QoQ and margin expanded 29 bps.

Also Read: Consumer biz now contributes one-third of quarterly EBITDA

EBIT margin improved 110 bps YoY to 4.9 percent led by customer centricity, operational efficiencies and expansion in Tier 3 and Tier 4 markets, Reliance said.

Reliance Retail added 337 stores in Q2, taking total store count now to 10,901 at the end of September quarter.

Other Income and Expenses

Company's other income during the quarter increased by 14.88 percent QoQ to Rs 3,614 crore and the same shot up 189 percent year-on-year.

Other expenditure in Q2 rose 22.2 percent to Rs 22,993 crore as against Rs 18,809 crore in the corresponding period of the previous year primarily due to higher network operating expenses and regulatory charges. The sequential increase was 2.8 percent.

Tax expenses fell sharply by 12.35 percent sequentially to Rs 3,703 crore in the quarter ended September 2019 but the same increased by 1.48 percent YoY.

Debt and Cash Levels

The outstanding debt at the end of September 2019 was Rs 291,982 crore compared to Rs 287,505 crore as of March 2019 while cash and cash equivalents were at Rs 134,746 crore against Rs 133,027 crore during the same periods.

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

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First Published on Oct 18, 2019 09:33 pm
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