Reliance Jio, Retail businesses become RIL lifeline as lockdowns hit Ambani’s traditional cash-cows

RIL’s revenues stood at Rs 1 lakh crore while total income was at Rs 95,626 crore.

Mukesh Ambani-led Reliance Industries Ltd (RIL) posted a 31% jump in net profit despite reporting a 42% fall in revenue as consumer facing businesses became the lifeline of the oil-to-telecom major. “Our consumer facing businesses became the life-line for individuals and businesses with our Retail and Jio teams working hard to ensure millions got essential goods and services through the lockdown,” said RIL Chairman Mukesh Ambani. Net profit jumped of the largest private company in India were recorded at Rs 13,248 crore.

The retail business revenue stood at Rs 31,633 crore while digital services revenue was at Rs 21,302 crore. RIL’s revenue from Refining and petrochemicals stood at Rs 46,642 crore and Rs 25,192 crore, respectively. Revenues were down to Rs 1.1 lakh crore in the April-June quarter down from Rs 1.74 lakh crore in the same period last year. Revenue from the retail business fell marginally despite the coronavirus aided lockdowns disrupted business. 50% of the stores, Reliance said were shut fully while 29% were operated partially. RIL’s total income fell to Rs 95,626 crore in April-June from Rs 165,199 crore in the same period a year ago. Other income increased to Rs 4,388 crore. Expenses for the company fell to Rs 87,000 crore.

BP acquired 49% equity stake in RBML by way of subscribing to 7.42% equity shares of Reliance BP Mobility Limited (RBML)and balance by purchase of 41.58% of equity shares in RBML for an aggregate consideration of Rs 7,629 crore based on the enterprise value of US$ 2.04 billion. During the quarter, the Company recognised a gain of Rs 4,966 crore. Reliance Industries said that Refining and petrochemical business operated at over 90% capacity during lockdown.  Reliance Jio Infocomm, posted a net profit of Rs 2,520 crore as against Rs 891 crore in the same period last year. This was a jump of 182%.

The oil-to-chemicals business, revenues were hit and gross refining margins came at $6.3/bbl against $8.1/bbl from a year ago. The company said that global oil demand for the quarter is estimated to have contracted sharply by 16.4 mb/d due to lockdowns and travel restrictions globally. India oil product demand also declined sharply by 25.8% on-year during the quarter, led by ATF (-80.3%), MS(-35.9%) and HSD (-33.3%).

Relaince shares had ended Thursday’s trading session at Rs 2,108 per share, gaining 0.61% even as equity markets tanked. RIL shares have surged significantly from their March lows. Although some brokerages have started to turn cautious after the rally, many still believe that RIL has the potential to surge even higher and test waters at Rs 2,300 per share.