Reliance Industries Ltd., (RIL)
Reliance Industries Ltd., announced its quarterly results on Thursday, 30 Apr 2020. The numbers were below analyst expectations.
What Mainstream media says:
Some media houses chose to focus on positives of the result such as “robust” jio numbers and retail “EBITDA” margin raising by 144 bps while playing down inventory losses and falling gross refining margins.
However, market was not impressed by poor results. Nifty SGX fell sharply by more than 4%. RIL being an index heavy weight, it is likely to drag down index along with market sentiment at least in the short term.
Quarterly Group Financials- snapshot: [full quarterly result press release is here]
- Quarterly revenue fell both on Q-o-Q and Y-o-Y basis
- EPS after exceptional item saw a sharp drop
- Foot note shows substantial exceptional loss of Rs.4,267 Cr for the quarter and Rs.4,444 Cr for the year
- Details of the exceptional loss mentions that the loss was on account of inventory loss. Refiners typically
have to buy crude in advance to ensure regular supply. Crude takes a few months to arrive at refinery
and few more days to refine. At this point in time output prices could be different.
Snapshot from quarterly result statement explaining the exceptional loss is given below
Question is will the inventory losses continue in the coming quarter if yes how much?
- Recently Reuters reported that RIL is trying to sell its April-loading crude cargoes due to poor demand.
There is no update about this report in the quarterly financial statement. Therefore, its likely that the
inventory losses could continue for the next quarter.
- Without an official information on this from RIL, we may assume that the losses will be as big as it was for the Jan-March quarter. Reuters report is here
Other sector results:
- Reliance - Jio seems to be the only performer for the quarter for RIL
- Revenue fell quarter-on- quarter basis due to COVID19. Its impact in the coming quarter could be sever
- Gross Refining Margin fell sharply
Quarterly results are not up to market expectation and my custom indicator is showing divergence. Therefore I believe RIL is heading to 1250 levels.