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Jio profits, tax benefit, stake sale keep Reliance Q1 in black, despite 50% fall in petchem EBITDA

With every vertical other than Jio facing headwinds, Reliance Industries posted a 30.6 per cent rise in profit on the back of Rs 2,520 crore profit in its telecom business, tax benefits around Rs 4,000 crore and stake sale worth Rs 4,966 crore in Reliance BP Mobility Services

twitter-logoNevin John | July 30, 2020 | Updated 23:39 IST
Jio profits, tax benefit, stake sale keep Reliance Q1 in black, despite 50% fall in petchem EBITDA

Reliance Industries (RIL), the largest company in India by market capitalisation, has posted 30.6 per cent rise in profit to Rs 13,248 crore in the first quarter, thanks to spike in Jio's net profit, huge tax benefits, and Rs 4,966 crore exceptional gain on divestment of shares of Reliance BP Mobility Services. Reliance Jio Infocomm's profit increased 183 pc to Rs 2,520 crore from Rs 891 crore. The conglomerate's tax liability (current and deferred taxes) reduced to just Rs 260 crore from Rs 4,225 crore.

Jio's revenue from operations increased 33.7 per cent to Rs 16,557 crore. The EBITDA margin y-o-y increased to 44 per cent from 37.8 per cent. However, the increase in average revenue per user (ARPU) is 15 per cent - Rs 140.3 in Q1FY21 and Rs 122 in Q1FY20.

ALSO READ: RIL Q1 results: Profit rises 31% to Rs 13,248 crore, revenue at Rs 1,00,929 crore

Reliance Retail's segment revenue fell 17.2 per cent to Rs 31,633 crore, but the EBITDA fall was steeper by 47.4 per cent to Rs 1,083 crore. Store area increased to 29 million square feet from 23 million square feet. The company says, EBITDA margin was impacted by fixed costs and adverse mix (with the most profitable Fashion and Lifestyle categories being hit the hardest), despite gross margin expansion and cost savings.

In petrochemicals business also, EBITDA has dropped more than revenue. The segment revenue decreased 33 per cent to Rs 25,192 crore, while EBITDA crashed 49.7 per cent to Rs 4,430 crore. According to RIL, weak domestic demand and higher share of exports impacted margins as compared to regional benchmarks.

RIL inverted its business model from 20:80 exports-domestic to 80:20. The impact of lower realisation was partially offset by cost optimisation and integration benefits.

ALSO READ: Reliance Q1 results: O2C business revenue plunges 33% to Rs 25,192 crore; topline from oil & gas dips 45%

The segment revenues of crude refining and marketing business declined by 54.1 per cent to Rs 46,642 crore due to lower crude oil price and lower throughput. In addition, the gross refining margin (difference between the cost of a barrel of crude and the value fetched from sale of refined products) fell to $6.3 from $8.1. However, the EBITDA reduction is not in that level - 25.8 per cent decline to Rs 3,818 crore - despite the weak margin environment and lower throughput. The company says that the refining segment profitability was sustained through optimised crude procurement, relatively higher utilisation, cost management and agile product placement.

The segment revenues of oil and gas segment declined by 45.2 per cent to Rs 506 crore primarily due to lower production in domestic business post closure of Panna Mukta and D1D3 fields, besides lower crude prices. The segment posted EBITDA loss of Rs 32 crore, compared to positive earnings of Rs 207 crore in the same quarter last year.

ALSO READ: Reliance Retail profit hit by coronavirus, EBITDA nearly halves to Rs 1,083 crore

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