Reliance Industries Ltd – Q3 Results Update & Analysis (Reliance Company Performance Review)

The Q3 results of Reliance Industries Limited were released/declared on 17^th January 2019.

Reliance Industries is a huge company and is expected to be sustained for the long term. Reliance Group is a very diversified company and are diversifying continuously. They are also able to build and sustain cash flow generating businesses.

Main Businesses: –

1. Refining and Marketing
2. Petrochemicals
3. Oil & Gas (Exploration and Production)
4. Organized Retail
5. Media
6. Digital Services

Highlights of the Q3 Results

• Q3 2018 Consolidated Revenue of Rs. 1,71,336 crores
  • Grew by 55.9% on YoY basis from last year’s same quarter
  • Grew by 9.6% on QoQ basis from last this year’s previous quarter
• Q3 2018 Consolidated Net Profit of Rs. 10,251 crores
  • Grew by 8.8% on YoY from last year’s same quarter
  • Grew by 7.7% on QoQ basis from last this year’s previous quarter
• Q3 2018 Consolidated Profit Before Depreciation, Interest & Tax (PBDIT) of Rs. 23,801 crores
  • Grew by 20.0% on YoY from last year’s same quarter
  • Grew by 6.4% on QoQ basis from last this year’s previous quarter
• All the QoQ growths are very good.
• Reliance Industries Ltd. has become the first country in India whose quarterly Net Profit had went above the 10,000. This means that one can expect a net profit of almost Rs. 40,000 crores (approx. $6 billion) from the company. This is a very big achievement for Reliance Industries.

Business Segment-wise Performance

1. Refining & Marketing Business
   1. This is the main business of Reliance and the biggest cash generator for them
   2. Q3 2018 Segmental Revenue of Rs. 1,11,738 crores
      1. Grew by 47.3% on YoY basis from last year’s same quarter (Rs. 75,865 crores)
      2. Grew by 13.1% on QoQ basis from last this year’s previous quarter (Rs. 98,760 crores)
   3. Very good numbers here
2. Petrochemicals Business
   1. This another cash source of the company
   2. Q3 2018 Segmental Revenue of Rs. 46,246 crores
      • Grew by 37.1% on YoY basis from last year’s same quarter (Rs. 33,726 crores)
      • Grew by 5.7% on QoQ basis from last this year’s previous quarter (Rs. 43,745 crores)
   3. Q3 2018 Segmental EBIT of Rs. 8,221 crores
      • Grew by 42.9% on YoY basis from last year’s same quarter (Rs. 5,753 crores)
      • Grew by 1.2% on QoQ basis from last this year’s previous quarter (Rs. 8,120 crores)
   4. Very commendable numbers
3. Oil & Gas (Exploration and Production) Business
   1. This is business segment is that big contributor to the company
   2. Q3 2018 Segmental Revenue of Rs. 1,182 crores
      • Down by 27.5% on YoY basis from last year’s same quarter (Rs. 1,631 crores)
      • Grew by 10.6% on QoQ basis from last this year’s previous quarter (Rs. 1,322 crores)
   3. Negative Numbers here.
   4. The reason stated by the company is that the domestic production was down by 33% YoY whereas production in US shale operations declined by 37%.
   5. The meaning of this is that, in the last quarter (Oct-Dec) crude prices started dropping which had an effect on the company. When crude prices fall, the revenues and profitability are also affected.
4. Organized Retail Business
   1. Reliance is giving a lot of focus to this business segment, because they know that in the nest 10-20 years oil will have very less dependency. So, the level of profits currently earned from petrochemicals or oil refining will not be earned in the future, as alternative energy resources will gain market.  And that is why Reliance is developing varied business.
   2. Q3 2018 Segmental Revenue of Rs. 35,577 crores
      • Grew by 89.3% on YoY basis from last year’s same quarter (Rs. 18,798 crores)
      • Grew by 9.7% on QoQ basis from last this year’s previous quarter (Rs. 32,436 crores)
   3. Q3 2018 Segmental EBIT of Rs. 1,512 crores
      • Grew by 210.5% on YoY basis from last year’s same quarter (Rs. 487 crores)
      • Grew by 21.5% on QoQ basis from last this year’s previous quarter (Rs. 1,244 crores)
   4. Excellent YoY growths.
   5. Compared to their competitors like Avenue Supermarts (D-Mart) Share Price Fallthey are performing very brilliantly. (Avenue Supermarts (D-Mart) Share Price Fall had a little disappointing Q3 result.) it should be noted that Reliance is making huge cash investments here, unlike Avenue Supermarts (D-Mart) Share Price Fall which makes very calculated investments. This so because Avenue Supermarts (D-Mart) Share Price Fall does want to take on much debt, but as Reliance is cash rich, it is easy for them to raise debt. Thus, both the companies cannot be compared directly.
5. Media Business
   1. Network18 Media & Investments Limited
   2. A smaller business segment comparatively.
   3. Q3 2018 Segmental Revenue of Rs. 1,524 crores
      • Grew by 316.4% on YoY basis from last year’s same quarter (Rs. 366 crores)
      • Grew by 23.2% on QoQ basis from last this year’s previous quarter (Rs. 1,237 crores)
   4. Not performing very good currently, but with backing of Reliance Industries they will definitely see better days ahead
6. Digital Services Business
   1. The business of Reliance Jio
   2. Q3 2018 Segmental Revenue of Rs. 12,302 crores
      • Grew by 51.2% on YoY basis from last year’s same quarter (Rs. 8,136 crores)
      • Grew by 12.4% on QoQ basis from last this year’s previous quarter (Rs. 10,942 crores)
   3. Q3 2018 Segmental EBIT of Rs. 2,362 crores
      • Grew by 64.0% on YoY basis from last year’s same quarter (Rs. 1,440 crores)
      • Grew by 15.7% on QoQ basis from last this year’s previous quarter (Rs. 2,042 crores)
   4. Standalone revenue from operations is Rs. 10,383 crores (12.4% QoQ growth)
   5. Standalone Net profit of Rs. 831 crores
   6. Subscriber base of 280.1 million (28 crores). Added 27 million (2.7 crores) people in this quarter.
   7. Average Revenue Per User (ARPU) during the quarter is Rs. 130 per subscription per month. Lower than the last quarter.
   8. A huge jump can be seen in this business.

Summary: –

• No doubt that the Q3 results are very good.
• The best part about Reliance Industries Ltd. is that it is a very cash rich company because of which they can make a lot of investments right now, as they have huge reserves available with them. They are obviously taking advantage of this.
• Reliance Industries Ltd. has main focus on organized retail business and digital services (Jio). In these businesses, reliance may become a huge player in the future, which can also be seen currently.
• As expected, the stock of the company has received positive reactions from the markets.

Notes: –

• All the figures have been taken from the Media Release of Reliance Industries Ltd. itself.
• We are not suggesting to go and immediately buy this stock or invest in the stock market.