What are the key highlights of the Reliance results announced on 30 October for the Sep-20 quarter?

Interestingly, Reliance announced its results pretty late in the day on 30 October. It was almost past 8pm when the results were announced in contrast to the 6.30 pm that they normally announce at. Here are the key highlights.

· Reliance Industries reported a drop of around 24% in overall sales revenues for the Sep-20 quarter. The revenues stood at Rs.1,16,195 crore.

· Sales picked up the COVID lows of the Jun-20 quarter but it is lower than the Sep-19 period as the crude prices are almost 30% lower. That has led to a sharp decline in the rupee value of the sales. This is a normal phenomenon with oil companies.

· Operating profits for the quarter which is the operating profit after depreciation but before interest and other income, was 28.8% lower on yoy basis at Rs.12,319 crore. This was propped by higher GRMs sequentially.

· Net profits for the Sep-20 quarter were lower by 6.6% at Rs.10,602 crore. Increasingly, the profits are being driven by the non-oil related sectors in the portfolio of Reliance, especially digital.

· The whole story had a negative impact on net margins and positive impact on the net margins. OPM was down 68 bps at 10.60%. However, NPM for the quarter improved by 172 bps at 9.12% as these profits were achieved on a lower sales base.

· There are some interest takeaways if you look at the overall revenue categories among its four key business segments. For Sep-20 quarter, the major contributor to revenues was oil refining, but others are catching up.

· Oil refining accounted for 38% of revenues in Sep-20 quarter followed by retail at 24%, petchem at 18% while digital generated 14%. If you sum it up, these 4 critical segments together account for 94% of overall sales revenues.

· Sales are great, but how does profitability work for these segments. Since most of the businesses are long gestation businesses, PAT may be misleading. Hence the picture is clearer when you look at EBITDA.

· Out of the total EBITDA for the quarter of Rs.20,885 crore, digital accounted for 40% following by petchem at 29%, refining at 14% and retail at just 10%. Clearly these equations will change as the price of oil fluctuates.