RIL shares slip 5% as profit declines; biggest single day fall in five months
- Revenue fell 24% over last year to ₹1.16 lakh crore, higher than the estimated ₹1.11 lakh crore. Net profit fell 6.6% year-on-year to ₹10,602 crore in the July-September period
MUMBAI: Shares of Reliance Industries Ltd slipped 5% on Monday to hit over a three-month low after the company reported 15% decline in its net profit for the September quarter.
At 10.15am, the stock was at ₹1952.50 on the BSE, down 5% from its previous close. Intraday, the scrip declined 5.05%, its biggest single day fall since 13 May to hit a low of ₹1950. Year to date it has risen 31%.
Reliance Industries Ltd on Friday posted a profit of ₹9,567 crore for the fiscal second-quarter ended September, beating analysts’ estimates. While profit declined by 15% from a year earlier because of lower revenues from its oil and gas business, it was still higher than the ₹9,017.10 crore estimated by analysts in a Bloomberg survey.
Jio's net subscriber addition was on a lower side at 7.3mn to reach 405.6 mn at the end of September quarter. Its ARPU improved at Rs145 from Rs140.3 quarter on quarter.
"Cumulative ARPU growth in the last four quarters has been moderate at 14%, against Bharti’s 27%, and average tariff hike at about 25%. Nevertheless, its venture into multiple digital services, along with scope for ARPU improvement, offers ample growth opportunity," Motilal Oswal said in a recent report.
Retail business margin improved sequentially to 4.9% from 3.4% but was lower at 5.6% year-on-year due to a decline in revenues for the fashion & lifestyle and consumer electronic segments..
Further, petchem margins improved quarter on quarter to 20.1% from 17.6% while volume also grew 9% at 9.7mmt. However, EBITDA at refinery business dipped to $3.7/bbl from $4.3/bbl.
Brokerage firm IDBI Capital expects GRM and petchem margin to take another 2-3 quarters before inventory depletes.
Brokerage firm Kotak Institutional Equities has reduced its fiscal year 2022-23 estimate earnings per share by 1-3% factoring in lower downstream margins, slower FTTH rollout and modestly higher retail margins.
"Consumer-facing businesses formed >50% of RIL’s EBITDA in Q2, a fact well reflected in the expansion of its valuation multiples to ~16x FY22E EPS. However, we need to see earnings traction to justify the recent surge in stock price, as the rally factors in the debt reduction trigger. Global economies are still struggling to come out of the pandemic induced slowdown, with India being the worst affected (among large economies)" said BoB Capital in its recent report.
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