Deven Choksey decodes Reliance’s ‘better-than-expected’ earnings in Q4
Reliance Industries reported a 19% YoY jump in Q4 profit to Rs 19,299 crore ($2.5bn), with the group's digital unit, Jio, benefiting from a 13% rise in net profit to Rs 4,716 crore for the quarter, above estimates. Similarly, consolidated revenue ...
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Reliance Q4 profit jumped 19% year-on-year (YoY) to Rs 19,299 crore. Consolidated revenue for the quarter under review grew 2% on year to Rs 2.16 lakh crore. Meanwhile, Reliance Jio net profit rose 13% to Rs 4,716 crore for the quarter ended March, beating estimates by a healthy margin. Reliance Retail reported a 13% rise in net profit at Rs 2,415 crore for the quarter ended March, compared with Rs 2,139 crore in the corresponding quarter of last year.
A 19% increase in the other income to Rs 2,918 crore aided the bottomline during the quarter. Deven R Choksey, MD, KR Choksey Investment Managers, decodes Reliance earnings in conversation with ET Now.
The Street expectations were very soft this quarter and the actual number is now slightly on the higher side. How are you reading the margin expansion of above 18% versus an estimate of 16.5%.
Prima facie, the numbers look definitely better than expected, particularly when the Jio numbers came out. Better than expected numbers on the refining side of the business and better than expected numbers on the retail side of the business could have made the difference.
The view was that the Jio part and the retail part of the business would post a modest, steady growth at best. That’s exactly what has happened. Do you see growth pick up in the coming quarters?
The growth has to pick up on the retailing side of the activity largely because of the two reasons; one, the number of stores on the ground has increased to more than 18,000 and at the same time, the per store revenue has also been showing a decent amount of increase. In my viewpoint, these numbers are on the higher side, largely because of the other reasons, including their own brand and its contribution in retail business. When you have your own brands, you have largely the ability to produce better margins as we understand.
That is where one will probably try and understand how much is the contribution coming in from their own brands versus other brands. That is where the larger part of the success seems to be.
The ARPU number has come in at 178 versus expectation of 179.5 actually. What are your thoughts on the KG-D6 performance that seemed to be improving quarter on quarter. The Street was not factoring in a whole lot yet but it appears the trajectory of output over there is improving. Can that become a reasonable part of the oil and gas business in the next few quarters?
In significant terms these numbers are on the higher side from what it used to be a few years or few quarters back, rather. Compared to that, today these numbers are on a reasonably higher side. I guess a higher amount of output from KG-D6 could possibly result in giving far better stability to the financial performance of the company, as this business ends up contributing around 75% to 80% to the EBITDA and that is where probably higher the number could possibly result into better amount of contribution to the profits of the company going forward. Yes, the numbers are improving quarter-on-quarter.
A 19% increase in the other income to Rs 2,918 crore aided the bottomline during the quarter. Deven R Choksey, MD, KR Choksey Investment Managers, decodes Reliance earnings in conversation with ET Now.
The Street expectations were very soft this quarter and the actual number is now slightly on the higher side. How are you reading the margin expansion of above 18% versus an estimate of 16.5%.
Prima facie, the numbers look definitely better than expected, particularly when the Jio numbers came out. Better than expected numbers on the refining side of the business and better than expected numbers on the retail side of the business could have made the difference.
The view was that the Jio part and the retail part of the business would post a modest, steady growth at best. That’s exactly what has happened. Do you see growth pick up in the coming quarters?
The growth has to pick up on the retailing side of the activity largely because of the two reasons; one, the number of stores on the ground has increased to more than 18,000 and at the same time, the per store revenue has also been showing a decent amount of increase. In my viewpoint, these numbers are on the higher side, largely because of the other reasons, including their own brand and its contribution in retail business. When you have your own brands, you have largely the ability to produce better margins as we understand.
That is where one will probably try and understand how much is the contribution coming in from their own brands versus other brands. That is where the larger part of the success seems to be.
The ARPU number has come in at 178 versus expectation of 179.5 actually. What are your thoughts on the KG-D6 performance that seemed to be improving quarter on quarter. The Street was not factoring in a whole lot yet but it appears the trajectory of output over there is improving. Can that become a reasonable part of the oil and gas business in the next few quarters?
In significant terms these numbers are on the higher side from what it used to be a few years or few quarters back, rather. Compared to that, today these numbers are on a reasonably higher side. I guess a higher amount of output from KG-D6 could possibly result in giving far better stability to the financial performance of the company, as this business ends up contributing around 75% to 80% to the EBITDA and that is where probably higher the number could possibly result into better amount of contribution to the profits of the company going forward. Yes, the numbers are improving quarter-on-quarter.
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