Reliance Industries declines 2% as investors book profit post Q3 results

Shares of Reliance Industries (RIL) slipped 2 per cent to Rs 1,546 on the BSE on Monday regardless of the corporate logging its highest-ever quarterly consolidated web profit of Rs 11,640 crore for the quarter ended December 31, 2019 (Q3FY20).

The inventory has fallen four per cent from its early morning excessive of Rs 1,610 on profit-booking. During the previous 4 months, RIL has outperformed the market by surging 32 per cent, as in comparison with a 15 per cent rise within the S&P BSE Sensex until Friday. It touched an all-time excessive of Rs 1,618 on December 20, 2019.

While the consolidated web profit jumped 13.5 per cent year-on-year (YoY), the consolidated income decreased by 1.four per cent YoY to Rs 168,858 crore. “The decrease in revenue was primarily on account of a 10.6 per cent decline in order-to-cash (O2C) business revenues, with lower product price realization, and a 6.6 per cent fall in Brent Crude price,” RIL mentioned in a press release. The firm introduced results on Friday after market hours.

The stronger profitability in retail and telecom segments helped offset the sharp decline in petrochemical margins, the administration mentioned.

Petchem EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization)/mt was down round 20 per cent quarter-on-quarter (QoQ) on the again of a dip in PE/PP deltas by 30 per cent/43 per cent, PX/PTA by 17 per cent/39 per cent and polyester by 15-17 per cent as a consequence of larger feedstock costs, provide glut and world demand considerations.

Analysts at Emkay Global Financial Services have reduce FY20/21/22 EBITDA estimates by four per cent/2 per cent/1 per cent, maintaining in thoughts the weaker petchem margins, “although due to lower capex run-rate and strong Retail and Jio numbers”, the brokerage agency retained its goal worth of Rs 1,740.

“The much-awaited International Maritime Organization (IMO) regulations will boost the core refining business. However, both refining and petchem segments face demand slack, given the impending capacity additions in CY20. We expect both segments to peak out in the near term. The monetisation of Jio’s infrastructure is a catalyst, but timing/pricing is crucial,” analysts at HDFC Securities mentioned in results evaluate notice.

“Reported standalone EBITDA (earnings before interest, tax, depreciation, and amortization) was 10 per cent below our estimate at Rs 12,871 crore. Weak margins across petchem products and higher operating expenses have adversely impacted this segment,” the brokerage agency mentioned with ‘neutral’ score on the inventory and 12-month goal worth of Rs 1,562 per share.

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