InvestorQ : How did Reliance Industries report a sharp growth in profits although the revenues were down on a yoy basis in the Dec-20 quarter?
prachi Patwardhan made post

How did Reliance Industries report a sharp growth in profits although the revenues were down on a yoy basis in the Dec-20 quarter?

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sara Kunju answered.
5 months ago
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You are absolutely right that Reliance Industries Q3 PAT was up a healthy 25.8% yoy at Rs.14,894 crore and that was largely on the back of a major digital push. In fact, top line revenues for the Dec-20 quarter were 21.1% lower at Rs.123,997 crore. The Oil to Chemicals or O2C business saw 30% fall in revenues due to weak crude prices while retail was 20% lower on shutdowns in many places. Digital saved the day with 30% growth.

For the Reliance Industries, the consolidated operating profits were down 13.39% at Rs.14,900 crore due to lower sales revenues although cost of materials consumed came down sharply. OPM expanded from 10.95% in the Dec-19 quarter to 12.02% in Dec-20 quarter due to a smaller revenue base. PAT margins for the quarter expanded from 7.53% in Dec-19 to 12.01% in the current quarter.

The big story was digital and the quarterly EBITDA for digital services came in at a record level of Rs.8,942 crore. That nearly accounted for one-third the total EBITDA of the entire company businesses put together. Jio Platforms added 52 lakh customers in the quarter taking its total mobile and wireless customer base to 4.11cr. The average revenue per user, also known as ARPU moved up to Rs.151 compared to Rs.145 in the Sep-20 quarter.

There was some traction in non-digital businesses too. In fact, RIL and BP announced starting production from the R-Cluster Ultra-deep water gas field in Block KG-D6. Reliance also completed hiving off 10.09% in Reliance Retail to PE investors at Rs.47,300 crore. The company is also cash rich as it reported cash profits of nearly Rs.21,500 crore for the December quarter.

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