Jio Leading the April-June Quarter with Extraordinary Profit

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The Industry Outlook Team | Friday, 31 July 2020

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With net profits rising to an extraordinary 182.2 percent to Rs 2,520 crore, Jio was the leader and also a star of the quarter with operating income jumping 55.4 percent y-o-y to Rs 7,281 crore.

Largely driven by a good share of gain with a lower tax payout, Reliance Industries this Thursday reported a net profit of Rs 13,248 crore at a 30.6 percent y-o-y growth in the April-June quarter.

While their bottomline got a boost of Rs 4,966 crore because of an extraordinary profit - worth net of taxes of Rs 1,508 crore - due to the divestment of shares of Reliance BP Mobility Services and a lower tax liability. Moreover, the company also saw a 54 percent year-on-year growth in other income which was valued at Rs 4,388 crore. Also, looking at the quarter (April-June) tax payout was at Rs 923 at 71 percent year-on-year with deferred tax gains was at Rs 663 crore.

COVID-19 crisis had caused a nationwide lockdown which impacted Reliance’s various business verticals from refining, petrochemicals and retail. As it was certain that the crude oil prices fell due to the lower demand, it has also severely impacted refining margins.

While talking about the retail business in India, lockdown has also severely impacted its sales and has also impacted its high fixed costs which has declined segmental profits.

Retail revenues declined 17.2% y-o-y but the operating income fell sharply by 47.4% to Rs 1,083 crore as margins collapsed to 3.8% from 6% last year.

However, with the boom of its telecom sector, Reliance’s retail revenue severely declined to 17.2 percent year-on-year, and moreover its operating income fell even badly to INR 1,083 crore at 47.4 percent with the margin collapsing from 6 percent to 3.8 percent in previous year.

This lockdown has also adversely affected its oil to chemical segment which is composed of its refining and petrochemical businesses.

If we look at the figures, revenue from the petrochemicals fell to INR 25,192 crore at 33 percent, while its earnings before interest, tax, depreciation, amortisation fell by 49.7 percent.

In the words of RIL chairman and managing director - Mukesh Ambani - there was a severe decrease in the demand of the hydrocarbons, but however, the flexibility in their operations has aided them to operate at almost average/normal level, hence delivering industry-leading results. “Our consumer facing businesses became the life-line for individuals and businesses,” he added.