RIL Q3 FY14 RESULT ANALYSIS
From our Research Desk
RIL has announced Q3FY14 revenue of Rs.1.04 lakh crore, which is on expected lines and a better PAT of Rs. 5,511 crore aided by other income, entailing EPS of Rs. 17.10 for the third quarter. GRM stood at US $ 7.6 per barrel, as per our expectations.
(Rs./Crore)
| Particulars | Q3 ending 31-12-13 | Q2 ending 30-09-13 | Q1 ending 30-06-13 | Year end 31-03-13 |
| Segment Revenue |
|
|
|
|
| 1) Petrochem | 25,280 | 24,892 | 21,950 | 88,108 |
| 2) Refinery | 95,432 | 97,456 | 81,458 | 3,33,774 |
| 3) Oil & Gas | 1,733 | 1,464 | 1,454 | 8,280 |
| 4) Others | 209 | 330 | 616 | 953 |
| Gross Turnover | 1,22,654 | 1,24,142 | 1,05,478 | 4,31,115 |
| Less: Inter Segment | 16,271 | 17,619 | 14,889 | 59,996 |
|
| 1,06,383 | 1,06,523 | 90,589 | 3,71,119 |
| Less: Excise Duty | 2,862 | 2,765 | 2,994 | 10,822 |
| Net Turnover | 1,03,521 | 1,03,758 | 87,595 | 3,60,297 |
|
|
|
|
|
|
| EBIT Margins |
|
|
|
|
| 1) Petrochem (8.40%)* | 2,124 | 2,504 | 1,888 | 7,328 |
| 2) Refinery (3.29%)* | 3,141 | 3,174 | 2,951 | 12,788 |
| 3) Oil & Gas (31.16%)* | 540 | 356 | 352 | 2,887 |
| 4) Others | 94 | 42 | 84 | 255 |
| PBIT | 5,899 | 6,076 | 5,275 | 23,258 |
| Less: Interest Expenses | -792 | -805 | -810 | -3,036 |
| Less: Other Unallocated Expenses | 38 | 49 | 569 | -183 |
| Add: Interest Income | 1,847 | 1551 | 1628 | 6,245 |
| PBT | 6,992 | 6,871 | 6,662 | 26,284 |
| Less: Provision for Current Tax | -1,459 | -1,436 | -1,391 | -5,244 |
| Less: Provision for Def. Tax | -22 | 55 | 81 | -37 |
| Profit After Tax | 5,511 | 5,490 | 5,352 | 21,003 |
| EPS | 17.1 | 17.0 | 16.6 | 64.8 |
*Figures in brackets indicates % margin for Q3FY14.
Result Analysis:
- Refinery: Company’s robust refining configuration enabled it to deliver stable refining profits despite declining regional benchmark margins. In Q3FY14, Jamnagar refineries processed 17.0 MMT of crude, an operating rate of 110%, sequentially lower due to maintenance shutdown of 5 days.
- Petchem: Poor domestic demand for polymers and polyester couples with sequential decline in regional deltas for key products (PP, PVC, fibre intermediates) lead to steep decline in EBIT margins of 166 bps sequentially from 10.06% in Q2 to 8.40% in Q3, which is a big disappointment. Company has commissioned its first plant in petrochemical expansions – a Polyester Filament Yarn (PFY) plant at Silvassa raising polyester capacity from 2.4 MMTPA to 2.8 MMTPA.
- Retail: Business recorded a LFL (like-for-like) growth of up to 21% across various format sectors. As on 31st December 2013, Reliance Retail operated 1,577 stores across 141 cities, having opened more than one store a day (across format) in the third quarter.
- Other Income: Interest income is up Rs. 296 crore QoQ from Rs. 1,551 crore in Q2 to Rs. 1,847 crore in Q3. Higher contribution of treasury income (26.4% of pre-tax profit, up from 22.6% of PBT in Q2) another concern on the business and its prospects. Cash and cash equivalents stand at Rs 88,705 crore, as at 31st December 2013.
Verdict
- RIL has lined up huge investments to expand capacity in Petchem segment. But shrinking margins during the quarter for that business is not encouraging at all. The refinery business seems to have saturated and no major expansion lined up for refinery.
- FY14 EPS estimated at Rs.68.
- For Monday, we do not expect any upside in RIL share price, and have a negative bias of 1-2% for the day.
From our Research Desk
RIL has announced Q3FY14 revenue of Rs.1.04 lakh crore, which is on expected lines and a better PAT of Rs. 5,511 crore aided by other income, entailing EPS of Rs. 17.10 for the third quarter. GRM stood at US $ 7.6 per barrel, as per our expectations.
(Rs./Crore)
| Particulars | Q3 ending 31-12-13 | Q2 ending 30-09-13 | Q1 ending 30-06-13 | Year end 31-03-13 |
| Segment Revenue |
|
|
|
|
| 1) Petrochem | 25,280 | 24,892 | 21,950 | 88,108 |
| 2) Refinery | 95,432 | 97,456 | 81,458 | 3,33,774 |
| 3) Oil & Gas | 1,733 | 1,464 | 1,454 | 8,280 |
| 4) Others | 209 | 330 | 616 | 953 |
| Gross Turnover | 1,22,654 | 1,24,142 | 1,05,478 | 4,31,115 |
| Less: Inter Segment | 16,271 | 17,619 | 14,889 | 59,996 |
|
| 1,06,383 | 1,06,523 | 90,589 | 3,71,119 |
| Less: Excise Duty | 2,862 | 2,765 | 2,994 | 10,822 |
| Net Turnover | 1,03,521 | 1,03,758 | 87,595 | 3,60,297 |
|
|
|
|
|
|
| EBIT Margins |
|
|
|
|
| 1) Petrochem (8.40%)* | 2,124 | 2,504 | 1,888 | 7,328 |
| 2) Refinery (3.29%)* | 3,141 | 3,174 | 2,951 | 12,788 |
| 3) Oil & Gas (31.16%)* | 540 | 356 | 352 | 2,887 |
| 4) Others | 94 | 42 | 84 | 255 |
| PBIT | 5,899 | 6,076 | 5,275 | 23,258 |
| Less: Interest Expenses | -792 | -805 | -810 | -3,036 |
| Less: Other Unallocated Expenses | 38 | 49 | 569 | -183 |
| Add: Interest Income | 1,847 | 1551 | 1628 | 6,245 |
| PBT | 6,992 | 6,871 | 6,662 | 26,284 |
| Less: Provision for Current Tax | -1,459 | -1,436 | -1,391 | -5,244 |
| Less: Provision for Def. Tax | -22 | 55 | 81 | -37 |
| Profit After Tax | 5,511 | 5,490 | 5,352 | 21,003 |
| EPS | 17.1 | 17.0 | 16.6 | 64.8 |
*Figures in brackets indicates % margin for Q3FY14.
Result Analysis:
- Refinery: Company’s robust refining configuration enabled it to deliver stable refining profits despite declining regional benchmark margins. In Q3FY14, Jamnagar refineries processed 17.0 MMT of crude, an operating rate of 110%, sequentially lower due to maintenance shutdown of 5 days.
- Petchem: Poor domestic demand for polymers and polyester couples with sequential decline in regional deltas for key products (PP, PVC, fibre intermediates) lead to steep decline in EBIT margins of 166 bps sequentially from 10.06% in Q2 to 8.40% in Q3, which is a big disappointment. Company has commissioned its first plant in petrochemical expansions – a Polyester Filament Yarn (PFY) plant at Silvassa raising polyester capacity from 2.4 MMTPA to 2.8 MMTPA.
- Retail: Business recorded a LFL (like-for-like) growth of up to 21% across various format sectors. As on 31st December 2013, Reliance Retail operated 1,577 stores across 141 cities, having opened more than one store a day (across format) in the third quarter.
- Other Income: Interest income is up Rs. 296 crore QoQ from Rs. 1,551 crore in Q2 to Rs. 1,847 crore in Q3. Higher contribution of treasury income (26.4% of pre-tax profit, up from 22.6% of PBT in Q2) another concern on the business and its prospects. Cash and cash equivalents stand at Rs 88,705 crore, as at 31st December 2013.
Verdict
- RIL has lined up huge investments to expand capacity in Petchem segment. But shrinking margins during the quarter for that business is not encouraging at all. The refinery business seems to have saturated and no major expansion lined up for refinery.
- FY14 EPS estimated at Rs.68.
- For Monday, we do not expect any upside in RIL share price, and have a negative bias of 1-2% for the day.