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RIL Posts Record USD 1.5 Bn Profit; 10 Key Takeaways From Q3 Results

Reliance Industries reported net profit as well as revenue which were higher than analyst estimates for the quarter-ended December. However, margins came in a bit lower than consensus estimates.

Analysts are of the view that the stock is likely to open higher on January 18, and with strong results, it is a strong contender for re-rating.

We will see some significant upgrades happening for RIL beginning Friday for couple of reasons. Analysts will start factoring in FY21 numbers which is just 18 months away.

“We will see some significant upgrades happening for RIL beginning Friday for couple of reasons. Analysts will start factoring in FY21 numbers which is just 18 months and all the stagnant businesses will start getting revalued higher,” Prakash Diwan, independent market experts said in an interview with CNBC-TV18.

“The CapEx has also started to pay off well. Now, the weighted average cost of capital is much more reasonable. So, it looks like from Friday onwards we should see re-rating for the stock in terms of high PE multiple and EPS expansion on all these counts,” he said.

“RIL reported marginally higher-than-expected standalone EBITDA given slight beat in GRM at $8.8/bbl while petchem margin at 17.6% was in-line with our estimates. Reliance JIO net profit increased sharply by 22% q-o-q to Rs831 crore led by sharp increase in the subscriber base while ARPU remained resilient at Rs130/subscriber per month,” Abhijeet Bora, analyst, Sharekhan by BNP Paribas told Moneycontrol.

“We believe that likely strong subscriber additions in telecom business, sustained high growth in retail business and boost to refining margin from IMO regulations would act as key catalyst for the stock. We maintain our Buy rating on RIL,” he said.

Here is a list of top 10 takeaways from RIL Q3 results:

Net Profit:

RIL reported a record net profit of Rs 10,250 crore for the quarter-ended December which was ahead of CNBC-TV18 poll of Rs 9,690 crore led by retail as well as Jio business.

The net profit for RIL grew by 7.7 percent on a quarter-on-quarter basis and 8.8 percent on a year-on-year basis.

Consolidated Revenues:

The oil & gas major reported consolidated revenues of Rs 1.6 lakh crore for the quarter-ended December, up 56 percent on YoY basis. It reported revenue from operations of Rs 1.02 lakh crore.

Increase in revenue is primarily on account of higher price realizations and volumes for petrochemical and refining businesses along with continuing strong growth momentum in consumer businesses.

Product prices for the refining and petrochemicals businesses increased in line with 10.4 percent higher average Brent crude oil price. The higher volumes in petrochemical business are on account of stabilisation and ramp-up of new petrochemical facilities.

Retail business and Digital Services business recorded an increase of 89 percent and 51 percent, respectively, in revenue during the quarter compared to the corresponding quarter of the previous year.

Reliance Jio:

Reliance Jio has reported profit at Rs 831 crore, higher by 22 percent as compared to Rs 681 crore in previous quarter and 65 percent as compared to a year-ago period.

“The journey of Jio has been truly remarkable and has surpassed all expectations. The Jio family is now 280 million strong and growing on one of the world’s largest mobile data networks, in line with our vision of connecting everyone and everything, everywhere – always at the highest quality and the most affordable price,” Mukesh Ambani, Chairman and Managing Director, Reliance Industries said in a note.

Jio Revenues:

The telecom company has crossed Rs 10,000 crore in quarterly operating revenue within six quarters of commercial operations. Operating revenue increased 12.4 percent sequentially to Rs 10,383 crore in the quarter ended December 2018.

Robust operational efficiency is reflected in industry-leading EBITDA margin of 39 percent which has driven the reported EBITDA over Rs 4,000 crore during the quarter.

Operating Profit:

Operating profit before other income and depreciation increased by 21.3 percent to Rs 21,317 crore ($ 3.1 billion) from Rs 17,580 crore in the corresponding period of the previous year.

The growth in operating profit was led by strong operating performance in petrochemicals, retail and digital services businesses.


At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 13.4 percent quarter-on-quarter to Rs 4,053 crore and margin increased by 30 bps to 39 percent in Q3.

Gross Refining Margins (GRMs):

RIL maintained significant premium over Singapore complex margins due to product yield optimization and robust risk management. GRM for 3Q FY19 stood at $8.8/bbl, outperforming Singapore complex margins by $4.5/bbl.

GRMs were much lower than 9.5 percent in the previous quarter, falling for the fifth straight quarter.

Organised Retail Business:

Revenue for 3QFY19 grew by 89.3 percent on a YoY basis to Rs 35,577 crore from Rs 18,798 crore. Healthy festive season sales and new store openings resulted in another robust quarter. Reliance Retail further consolidated its leadership position and is India’s largest, most profitable and fastest growing retailer.

Segment EBIT rose by 210.5 percent YoY to Rs 1,512 crore from Rs 487 crore demonstrating strong operating profit during the quarter. EBIT margin for the segment improved by 160 bps to 4.2 percent reflecting scale benefits.

Petrochemicals Business:

The December quarter revenue from the petrochemicals segment increased by 37.1 percent on a YoY basis to Rs 46,246 crore ($6.6 billion) due to increase in price realizations and volumes primarily in polymer products and fibre intermediates. Petrochemicals segment EBIT was at Rs 8,221 crore ($ 1.2 billion), up 42.9 percent YoY.

Oil & Gas Business:

The December quarter revenue from the Oil & Gas segment decreased by 27.5 percentg on a YoY basis to Rs 1,182 crore. The segment EBIT at (185) crore as against (291) crore in the corresponding period of the previous year.

The segment performance continued to be impacted by declining volume. Domestic production was lower at 13.2 BCFe, down 33 percent YoY whereas production in US Shale operations declined by 37 percent to 21.2 BCFe. – Moneycontrol

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