5 takeaways from RIL's March quarter numbers

Refining and Petrochemicals division saved the day for Reliance Industries as oil prices and lower oil and gas volume had a dent on its oil and gas division. Despite lower oil prices the company posted a record quarterly operating and net profit in March 2016 quarter.

Following are the five key highlights of Reliance Industries March 2016 quarter results:

1. Lower oil and finished product prices have had an impact of Reliance Industries topline which has shown a decline of 8.9% to Rs 64,569 crore. Decline was mainly on account of a 41.4% drop in oil prices which averaged $30.4 per barrel as compared to $51.9% in the same period last year. The fall was sharper as compared to the previous quarter which saw a revenue of Rs 73,341 crore. Exports too posted a 17.5% decline as product prices impacted revenues.

2. Fall in finished product prices was slower than raw material prices (crude oil) as a result its operating profit (PBDIT) increase by 15.5% to Rs 13,823 crore from Rs 11,973 crore in the previous year and a 0.3% jump to Rs 13,778 crore. Gross Refining Margin (GRM) which stood at $10.8 per barrel much above $7.70 per barrel in Singapore and favourable exchange rate scenario helped the company post higher operating margin and operating profits. Operating margin at 21.5% was higher than 18.2% in previous quarter.

3. Refining and marketing business saw a revenue fall of 14.8% Y-o-Y but a steeper oil price fall helped EBIT (earnings before interest and tax) increase by 30.4% Y-o-Y. Petrochemicals division saw a marginal decline in revenue by 3.9% but EBIT increased by 35.4% with strength seen in both polymer and polyester segments.

4. Oil and gas division continues to disappoint with revenues decreasing by 34.8% Y-o-Y. But EBIT took a much higher beating falling by 97.1% on a YoY basis. The segment is barely profitable with EBIT of Rs 14 crore as compared to Rs 489 crore last year. Retail division has added to the topline on a YoY basis but on a QoQ levels its revenue and profit have both fallen. Revenue at Rs 5,781 crore was lower by 4.3% as compared to previous quarter at Rs 6,042 crore and EBIT stood at Rs 235 crore as against Rs 243 crore in the previous quarter.

5. Reliance Industries is however increasing its debt level which has moved up to Rs 1.81 lakh crore as compared to Rs 1.61 lakh crore. Cash levels stood at Rs 86,033 crore leaving a net debt of around Rs 95,000 crore in the company.

All eyes however, are on launch of Reliance Jio. Though the company has not given any specific date for the launch it has mentioned that Jio is already serving half a million users on trial basis. The company intends to achieve a population coverage of 90% by launch. Currently the coverage stands at 70%. Clarity on Jio launch matters more than Reliance’s quarterly numbers, especially since Mukesh Ambani himself has commented that roll-out of Jio’s services will propel growth.