India's most-valued company Reliance Industries (RIL), owned by the country's richest man Mukesh Ambani, has seen sharp fall in financial performance. "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 industryleading results," Chairman Ambani said.
April-June 2020
Amount
Growth
Revenue
₹52,263 crore
-46%
Net profit
₹9,753 crore
7.90%
Refining and petrochemicals, which together make for over three-fourth's of the company's revenue saw a sharp decline in performance. Refining revenue more than halved, petrochemicals revenue fell by a third compared to the same time last year as global demand crashed and so did crude oil prices.
Segment
Revenue
Operating profit
Petrochemicals
-33%
-55%
Refining
-54%
-35.71%
Retail
-17%
-59.50%
Digital Services (Jio)
34%
50.80%
Gross refining margin fell to $6.3 per barrel, this is the lowest for the company in at least ten quarters.
RIL's gross refining margin in the April-June 2020 period has been the lowest in at least ten preceding quarters.Business Insider
Reliance Jio, the company's telecom and digital business, was the only exiciting part where the revenue grew by a third and the profit by nearly three times. The user base expanded to 398.3 million at the end of June 2020 and the average revenue per user went up to ₹140.3.
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Reliance Jio has added nearly 100 million new subscribers in the last 15 months.Business Insider
The retail business, which made for a quarter of the company's revenue, saw its profit fall by 59% as a majority of its over 11,000 stores were locked down due to the pandemic. However, the silver lining in the retail segment was the rise in orders for groceries and the improving potential for the e-commerce unit JioMart.
This will be a sobering moment for Reliance shareholders as the stock has seen a 40% rally this year so far while most of the share market slid deep into the red.
RIL share price has gained over 40% this year so far but the earnings for the April-June period have been disappointing.
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