Conglomerate Reliance Industries (RIL) reaped the benefits of the endurance of its oil business, the increasing popularity of its digital services and strong growth of its retail unit to ride out a tough quarter with better-than-expected earnings.
The combined performance of these businesses helped the company top projections of analysts and fend off the coronavirus slowdown with the first quarter results released on July 30. RIL reported a consolidated profit of Rs 13,248 crore for the first quarter of FY21 with Jio’s ARPU growth of 7.4 percent QoQ at Rs 140.3 per subscriber per month beating Street expectations.
“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,” Mukesh Dhirubhai Ambani, Chairman and Managing Director said.
“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,” he added.
Consolidated profit during June quarter 2020 (which included exceptional gain of Rs 4,966 crore from stake sale to BP in Reliance BP Mobility) increased 102.4 percent sequentially and the year-on-year increase was 30.6 percent.
Consolidated profit in March quarter 2020 stood at Rs 6,348 crore and Rs 10,141 crore in the corresponding period of last year.
In the March quarter, the company had reported an exceptional loss of Rs 4,267 crore due to fall in oil prices. Profit before the exceptional item was at Rs 10,813 crore.
RIL beat D-Street estimates in what according to most analysts was a tough quarter. Jio, Retail, and oil-to-chemical (O2C) all contributed to fight COVID induced slowdown.
Consolidated revenue from operations for the quarter stood at Rs 88,253 crore compared to Rs 1,36,240 crore QoQ and Rs 1,56,976 crore year-on-year.
A CNBC-TV18 analysts’ poll pegged revenue 16 percent lower YoY at Rs 1.14 lakh crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) 15 percent lower at Rs 18,511 crore. PAT at Rs 8,374 crore.
Ambani said Reliance Industries completed the largest fund raise in Indian Corporate history in this quarter. I thank the millions of individual investors who supported our Rights Issue and welcome all our new partners to an exciting new phase of growth at Reliance.”
RIL’s digital unit Jio Platforms, which raised Rs 1,52,056 crore during the quarter under review from some of the world’s top tech investors led by Facebook, was one of the few companies to have grown during the coronavirus lockdown.
With the fund raising from stake sale in Jio Platforms, Rights issue of Rs 53,124 crore and stake sale to BP in petro-retail joint venture, Reliance achieved its net debt free target in June 2020, which is well ahead of its timeline March 31, 2021.
Work from home boosted Jio’s data consumption. Reliance Jio, the wholly owned subsidiary of billionaire Mukesh Ambani-owned Reliance Industries, has reported profit at Rs 2,520 crore for the June quarter 2020, rising 8.1 percent over Rs 2,331 crore in March quarter.
Average revenue per user (ARPU) for the June quarter at Rs 140.3 per subscriber per month grew by 7.4 percent compared to Rs 130.6 in previous quarter. It was much higher than street expectations.
Prakash Diwan of Altamount Capital told CNBC-TV18 that there is no reason why Jio ARPU won’t go up further. “Retail will be the next big galloping horse. We don’t expect any selling pressure on RIL stock and Rs 2,300 zone may get tested in August,” he said.
The stock touched a record high of Rs 2,198.70 on July 27 and brokerages increased their target price due to deleveraging of the Balance Sheet and stake sale in Jio Platforms to global investors and technology players.
In fact, it has been the biggest gainer among Nifty stocks, rising 145 percent from its March 23 low, and gaining 41 percent year-to-date.
Work from home (WHF) boosts Jio’s data consumption and despite lockdown restrictions, the subscriber base grew robustly as both voice and data traffic surged.
Two RIL platforms — JioMart and JioMeet — which were rolled out during Q1 benefitted from huge downloads.
JioMart beta version was launched in 200 cities to meet consumer needs. Both voice and data traffic surged.
RIL is now one of the 50 most valued companies globally with a market capitalisation of Rs 13.92 lakh crore at its record high price.
Promoters’ shareholding stood at 50.37 percent in the June quarter up from 50.07 percent in the March quarter, while foreign portfolio investors (FPIs) raised their stake to 24.72 percent from 24.05 percent in the same period.
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