 "RIL Q2 net almost flat at Rs 5,972 cr")
During the July-September quarter, RIL, on a consolidated basis, posted a drop of 4.3% in turnover at Rs 1,13,396 crore against Rs 1,18,439 crore for July-September 2014.
Net profit for the period stood at Rs 5,972 crore, up 1.7%, against Rs 5,873 crore during the same period previous year. Exports from India were lower by 14.7% at Rs 66,065 crore against Rs 77,428 crore in the corresponding period of the previous year.
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Consolidation of Network 18 Media & Investments Limited from this quarter has also impacted the year on year comparisons.
RIL acquired Network 18 Media and its subsidiary TV18 Broadcast in July. Network 18 Media posted a consolidated net loss of Rs 30.4 crore for the July-September quarter on a turnover of Rs 744.8 crore.
Mukesh Ambani, Chairman and Managing Director, RIL said: “RIL’s financial performance for the period stands testimony to the intrinsic strength of our integrated business operations. The refining and petrochemical businesses, once again, delivered robust results, outperforming regional industry benchmarks.”
Ambani added that “Renewed optimism in the domestic economy augurs well for business and consumer confidence particularly against the backdrop of continuing concerns on global economic growth. We expect to create significant value for our stakeholders over the next 12-18 months as we complete our large investment programme across energy and consumer businesses. These projects will propel the next phase of growth for India and Reliance.”
Analysts had expected RIL’s gross refining margins—earnings from turning every barrel of crude oil into fuel --- to decline in line with benchmarks, driven by lower middle-distillates cracks.
But RIL posted GRM of $8.3 per barrel against $7.7 a barrel a year back.
“RIL’s premium over regional benchmark widened to $3.5 per barrel, as compared to $ 2.5 per barrel in the corresponding period of the previous year, primarily aided by wider crude differentials and sourcing advantage,” RAIL said in its earnings statement.
The company operates world’s largest single location refinery complex at Jamnagar, Gujarat. The refineries have a crude processing capacity of 1.36 million barrels a day. Owing to a better configuration of the refineries, RIL’s GRM is usually higher by $2-3 per barrel as compared to the Singapore benchmark.
The benchmark Singapore gross refining margin (GRM)— dropped by $1 per barrel to a 16-quarter low of $4.8 per barrel due to the seasonal weakness and weak global demand for products such as petrol and diesel.
During the quarter, Brent crude oil was down 7%. On a yearly basis it has declined 7.3%. Rupee on the other hand depreciated 1.3% quarter-on-quarter and appreciated 2.3% year on year.
Softness in crude oil prices and lower crude processing pushed revenue from the refining and marketing segment down by 5.9% to Rs 103,590 crore. RIL’s refining and petrochemical segments contribute nearly 75-80% to the overall profit of the company.
Segmnet EBIT for the quarter was up by 18.5% at Rs 3,844 crore led by higher GRM despite lower crude throughput.
Higher contribution from refinery, petrochemicals and oil and gas business saw RIL’s operating profit before other income and depreciation increase by 10.8% on a year-on-year basis from Rs 8,865 crore to Rs 9,818 crore.
Other income came in lower at Rs 2,009 crore against Rs 2,346 crore in corresponding period of the previous year, primarily on account of lower investible surplus.
Depreciation (including depletion and amortization) stood higher by 8.2% at Rs 3,024 crore as compared to Rs 2,796 crore in July-September 2014. Interest cost was at Rs 997 crore Rs 959 crore in corresponding period of the previous year.
Rahul Shah, Vice President-Equity Advisory group, MOSL, says," RIL results were broadly in line with our expectations, though they were higher than street expectations. Upmove in GRMs is a positive and has surprised the street.Overal, good results from RIL. I think the stock should see some run up in tomorrow's trading."
On the exploration and production front, RIL’s KG D6 produced 0.5 million barrels of crude oil, 0.1 million barrels of condensate and 40.6 billion cubic feet of natural gas during the quarter. Fall in production is mainly due to natural decline in the fields partly offset by incremental production from new well MA08 and side track in well MA6H during the previous year, the company said.
Panna-Mukta fields produced 1.8 million barrels of crude oil and 16.5 BCF of natural gas. The increase in production was on account of additional volumes from new well including in fills drilled.
Investment advisor, S P Tulsian,says," RIL results are very good. Refining and Petchem both have surprised this quarter. GRMs too have come in much better than expected and I believe these levels should be sustained. While I rule out any earnings revision given the already high earnings, I believe the stock should rise to Rs 988 level in tomorrow's trade."
Despite lower pricing and higher gas differentials, RIL’s shale gas business registered strong revenue and EBITDA growth. Marcellus JV production remained restricted below potential due to frac operations in offset wells and midstream maintenance activities as well as forced shut-in at times to prevent lower realization.
RIL which is planning to sell its 45% stake in the Eagle Ford Shale acreage said continued strong performance of Eagle Ford JV provided strong base for current quarter performance.
“While revenue growth suffered sequentially, EBITDA remained steady at first quarter levels benefiting from lower operating expenditure across all JVs,” RIL said.
Overall capex for the quarter was at $321 million and cumulative investment across all JVs stood at $7.7 billion. Substantial part of Pioneer and Carrizo JV capex are met through cash from respective JV operations.
Alok Agarwal, CFO, RIL said, “Assets where the company is not the operator and has seen value appreciate, are under review.”
Revenue from the Petrochemicals segment declined marginally to Rs 26,651 crore. Segment EBIT for the quarter remained flat at Rs 2,361 crore on year-on-year basis. However, on a quarter-on-quarter basis EBIT increased sharply by 26.7%, led by strong rebound in polymers, fibre intermediates and aromatics margins.
The company’s retail business recorded the highest revenue and PBDIT in any quarter and as a result of focused expansion, has crossed over 2,000 operational stores spanning 155 Indian cities. Revenue for Reliance Retail grew by 20% to Rs 4,167 crore. The business recorded a PBDIT of Rs 186 crore, a year-on-year increase of 96%.
On Monday, the company's stock on BSE closed 0.2% lower at Rs 957.85.