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Equity | News | Hot Pursuit
Hot Pursuit
RIL turns volatile after June quarter earnings
(10:51, 31 Jul 2020)

Consolidated total income for the quarter stood at Rs 95,626 crore, down 42.11% compared with Rs 165,199 crore year-on-year.

The decline in revenue was primarily due to fall in O2C revenues, led by sharp decline of 57.6% in average Brent crude price. Retail business also witnessed 17% decline in revenues due to lockdown and restrictions in store operations. Overall decline in revenue was partially offset by increase in revenue of Digital services business with strong subscriber addition and significant improvement in ARPU.

The company also managed to bring down total expenditure by about 42% YoY to Rs 87,406 crore in Q1 June 2020 from Rs 1,50,858 crore in Q1 June 2019. EBITDA declined 11.8% to Rs 21,585 crore in Q1 FY21 over Q1 FY20.

Profit before exceptional item and tax tumbled 40.54% to Rs 8,542 crore during the period under review. Current tax expense slumped 71.09% to Rs 923 crore in Q1 FY21 over Q1 FY20.

RIL reported exceptional gain of Rs 4,966 crore (net of taxes of Rs 1,508 crore) in Q1 FY21 due to profit on divestment of shares of Reliance BP Mobility Services.

Commenting on the results, Mukesh D. Ambani, chairman and managing director, RIL said: “The severe demand destruction due to global lockdowns impacted our hydrocarbons business but the flexibility in our operations enabled us to operate at near normal levels and deliver industry-leading results. Our consumer facing businesses became the life-line for individuals and businesses with our retail and Jio teams working hard to ensure millions got essential goods and services through the lockdown. We completed the largest fund raise in Indian corporate history in this quarter.”

Reliance Jio Infocomm's net profit surged 182.8% to Rs 2,520 crore on 33.7% increase in operating revenue to Rs 16,557 crore in Q1 FY21 over Q1 FY20. EBITDA jumped 55.4% to 7,281 crore during the period under review. EBITDA margin expanded 613 bps to 44% during the period under review.

ARPU during the quarter of Rs 140.3 per subscriber per month. Total wireless data traffic during the quarter of Rs 1,420 crore GB (30.2% YoY growth) with strong customer engagement and best-in-class network performance.

Jio Platforms has raised Rs 152,056 crore across thirteen investors which includes Facebook, Google, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton, Public Investment Fund of Saudi Arabia, Intel Capitaland Qualcomm Ventures. Reliance Industries, post completion of these investments, would hold 66.48% equity stake in Jio Platforms on a fully diluted basis.

Reliance Retail, however, witnessed a 17.20% YoY fall in revenue at Rs 31,633 crore during the quarter. EBITDA declined 47.40% to Rs 1,083 crore in Q1 FY20 from Rs 2,060 crore in Q1 FY20. EBITDA margin stood at 3.8% as on 30 June 2020 as against 6% as on 30 June 2019.

The company said that the quarter saw 21% growth year on year across the operational businesses of Grocery and Connectivity. Consumer Electronics and Fashion and Lifestyle businesses were hit particularly hard by the cessation of activity during the lockdown period, as stores were closed for the most part of the quarter.

It further said that EBITDA was positive and resilient despite the limitations in the quarter, with cost management initiatives leading to fixed cost savings, which helped cushion the impact of lower profits from lower sales.

O2C - Petrochemicals revenue degrew by 33% YoY to Rs 25,192 crore in the June quarter. EBITDA contracted by 49.7% to Rs 4,430 crore in Q1 FY20 from Rs 8,810 crore in Q1 FY20. EBITDA margin stood at 17.6% as on 30 June 2020 as against 23.4% as on 30 June 2019.

Weak domestic demand and higher share of exports impacted margins as compared to regional benchmarks. The impact of lower realization was partially offset by cost optimization and integration benefits, RIL said in a statement.

Revenues from the Refining & Marketing segment declined by 54.1% Y-o-Y to ₹ 46,642 crore due to lower crude oil price and lower throughput during the quarter. Consequently, EBITDA fell 25.8% to Rs 3,818 crore in Q1 FY20 from Rs 5,143 crore in Q1 FY20. EBITDA margin stood at 8.2% as on 30 June 2020 as against 5.1% as on 30 June 2019.

Gross refining margin (GRM) fell to $6.3 per barrel in the first quarter of the financial year 2020-21 from $8.1 reported in the corresponding period last year. GRM was impacted by lower product cracks and narrower light-heavy crude differential. However, RIL maintained a significant premium of $7.2/bbl over regional benchmark margin.

RIL said that it optimized its refining operations to provide feedstock to Petrochemicals while meeting other supply commitments. The company used flexibility in its refining configuration to swing significant production of Aviation Turbine Fuel (ATF) into Diesel and other products as ATF demand was severely impacted due to air travel restrictions.

Oil and Gas (Exploration & Production) Business reported 45.2% drop in revenue as it stood at Rs 506 in Q1 June 2020 as against Rs 923 crore in Q1 June 2019, primarily due to lower production in domestic business post closure of Panna Mukta and D1D3 fields and lower prices.

The segment reported a negative EBITDA of Rs 32 crore with a negative EBITDA margin of 6.3% in Q1 FY21 due to lower volumes and weak realizations. It had reported an EBITDA of Rs 207 crore with an EBITDA margin of 22.4% in Q1 FY20.

RIL's Media Business witnessed 35.2% YoY decline in revenues to Rs 807 crore in Q1 FY21 primarily due to the COVID-19 linked clampdown on spending by advertisers, particularly in entertainment segment.

EBITDA fell 41.3% to Rs 27 crore in Q1 June 2020 from Rs 46 crore in Q1 June 2019. However, aggressive and broad-based cost-controls across business verticals limited the fall, the company said.

Consequently, EBITDA margin stood at 3.3% as on 30 June 2020 as against 3.7% as on 30 June 2019. It further added that easing of lockdown towards the end of the quarter was leading to improved advertising traction, especially in the news segment.

Reliance Industries is India's largest private sector company. RIL's activities span hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services.

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