RIL’s consolidated other income for the third quarter stood at Rs 3,645 crore which forms about 31% of its net income for the quarter.
Reliance Industries (RIL), the country’s most valuable company by market cap, reported a 13.5% increase in its net profits to a record high of Rs 11,640 crore for the quarter ended December, beating Bloomberg consensus estimates. Consumer businesses now account for over 37% of the consolidated Ebitda of RIL.
However, revenues for Q3FY20 fell 1.4% to Rs 1.68 lakh crore, primarily on account of a 10.6% decline in revenues from its oil-to-chemicals (O2C) segment, with lower product price realisation and 6.6% fall in Brent crude price. This was partially offset by the continuing growth momentum in consumer businesses, RIL said.
The company’s operating income rose 9.6% to Rs 26,088 crore. RIL’s consolidated other income for the third quarter stood at Rs 3,645 crore which forms about 31% of its net income for the quarter. Shares of RIL closed 2.79% higher at Rs 1,580.65 on the BSE on Friday.
Mukesh Ambani, chairman and managing director of Reliance Industries said the third quarter results for the group’s 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. Refining segment performance improved in a difficult operating environment given our continuous focus on cost positions, high operating rates and product placement. I am pleased with the progress of our consumer businesses which continue to establish new milestones every quarter. We saw consistent same store sales growth and record footfall across our stores,” he said.
Reliance Retail’s segment revenue crossed Rs 45,000-crore mark during the quarter. Segment revenue for Q3FY20 grew by 27.4% year-on-year (YoY) to Rs 45,327 crore as against Rs 35,577 crore in the corresponding period last year. Revenue growth was led by robust 35.7% growth in consumer electronics, fashion and lifestyle and grocery segments.
Segment EBIT for the quarter grew by 58% YoY to Rs 2,389 crore. EBIT margins improved 110 bps to 5.3% led by robust store productivity, portfolio mix and operating efficiencies.
RIL CFO Alok Agarwal said consumer business accounts for over 37% of the consolidated Ebitda. “This was less than 1% five years ago. Net debt has declined sequentially,” he said.
Deven Choksey, MD at KR Choksey Investment Managers, said the important point is that consumer businesses will contribute to profit performance. “For the full year share of consumer business will be 35% in profits. If you look at the kind of movement, here you see higher contribution coming from Jio and quality of business is far better,” he said.
The third quarter gross refining margins (GRMs) came in at $9.2/barrel (bbl) against $8.8/bbl in the same period last year. Revenues from the refining and marketing segment decreased 7.2% YoY to Rs 1.03 lakh crore, while segment EBIT increased by 11.9% YoY to Rs 5,657 crore with higher throughput and better GRMs.
RIL’s petrochemical business witnessed its segment revenue fall by 19.1% YoY to Rs 36,909 crore. Petrochemicals segment EBIT fell 28.5% on a YoY basis to Rs 5,880 crore with significant decline in margins to near trough level for most petrochemicals products, as a result of new capacity, inventory overhang and global demand slowdown.