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Why Reliance's Q4 numbers fail to excite

Exports from RIL's India operations decreased by 28.2 per cent to Rs 145,143 crore year-on-year. EBITDA decreased by 4.6 per cent to Rs 97,580 crore due to sectoral struggle of the O2C businesses

twitter-logoNevin John | May 1, 2021 | Updated 00:42 IST
Why Reliance's Q4 numbers fail to excite

Reliance Industries (RIL), India's largest company by market capitalisation, has posted slight improvemnt in profit in sequential quarters (fourth versus third quarter of FY21), however there are some worries in all its major segments. The consolidated profit increased to Rs 14,995 crore in January-March quarter, compared to Rs 14,894 crore in the October-December quarter.

The operational revenue of Jio Platforms Ltd (JPL) fell in sequential quarters by 6.1 per cent to Rs 18,278 crore, while earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 1.1 per cent to Rs 8,573 crore. The net profit increased 0.5 per cent sequentially to Rs 3,508 crore.

ALSO READ: Reliance Industries FY21 net profit rises 35% to Rs 53,739 crore

The EBITDA margin of Reliance O2C - it includes two refineries, petrochemical unit and fuel retailing joint venture with BP Plc - fell to 11.3 per cent in the fourth quarter from 12.4 per cent in the same period last year. The segment revenue increased by 20.6 per cent to Rs 101,080 crore in sequential quarters, while EBITDA increased at 16.9 per cent to Rs 11,407 crore. RIL has not provided gross refining margin (GRM) this time.

Reliance Retail reported lower annual revenue on account of the effect of the pandemic. In the fourth quarter, the revenue rose 25.1 per cent in sequential quarters to Rs 41,296 crore. However, EBITDA increase was lower at 17.2 per cent to Rs 3,617 crore. The EBITDA margin fell in sequential quarters - 8.8 per cent versus 9.3 per cent.

RIL's consolidated revenue fell 18.3 per cent to Rs 539,238 crore in 2020-21 due to lower volumes and realisation across key products in O2C segment during the time COVID-19 pandemic spread and lockdown. It has been partially offset by higher revenue from Reliance Jio on account of continued subscriber traction and higher ARPU.

ALSO READ: Reliance Jio Q4 results: Profit jumps 47.5% to Rs 3,508 crore

The exports from RIL's India operations decreased by 28.2 per cent to Rs 145,143 crore year-on-year. EBITDA decreased by 4.6 per cent to Rs 97,580 crore due to sectoral struggle of the O2C businesses.

RIL's finance cost decreased by 3.8 per cent to Rs 21,189 crore as it raised large capital from stake sale in Jio Platforms and Reliance Retail Ventures. Profit after tax (after exceptional items) increased by 34.8 per cent to Rs 53,739 crore - thanks to Rs 5,642 crore gain from shale gas asset sales. In comparison, the company had booked Rs 4,245 crore loss due to substantial fall in oil prices and demand destruction in the previous year.

RIL has surplus net cash of over Rs 2,000 crore on books because of high cash component realised from stake sale. The outstanding debt was Rs 251,811 crore, while cash and cash equivalents (including share call money receivable on Rights Issue) stood at Rs 254,019 crore. The investments continued in Jio and retail businesses as RIL spent Rs 79,667 crore as capital expenditure in 2020-21.

ALSO READ: Reliance Retail becomes fourth Indian company to achieve $100 billion valuation

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