RIL Q2 FY14 RESULT ANALYSIS - UPDATE
RIL Q2 FY14 RESULT ANALYSIS - UPDATE
From our Research Desk
RIL has announced better-than-expected Q2FY14 revenues of Rs.1.04 lakh crore and PAT of Rs. 5,490 crore, entailing EPS of Rs. 17 for the second quarter, thanks to significantly higher crude processing coupled with better-than-expected margins both in the refinery and petrochem segments. GRM stood at US $ 7.7 per barrel.
(Rs./Crore)
| Particulars | Q1 ending 30-09-13 | H1 ending 30-09-13 | Q1 ending 30-06-13 | Year end 31-03-13 |
| Segment Revenue |
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| 1) Petrochem | 24,892 | 46,842 | 21,950 | 88,108 |
| 2) Refinery | 97,456 | 1,78,914 | 81,458 | 3,33,774 |
| 3) Oil & Gas | 1,464 | 2,918 | 1,454 | 8,280 |
| 4) Others | 330 | 946 | 616 | 953 |
| Gross Turnover | 1,24,142 | 2,29,620 | 1,05,478 | 4,31,115 |
| Less: Inter Segment | 17,619 | 32,508 | 14,889 | 59,996 |
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| 1,06,523 | 1,97,112 | 90,589 | 3,71,119 |
| Less: Excise Duty | 2,765 | 5,709 | 2,994 | 10,822 |
| Net Turnover | 1,03,758 | 1,91,403 | 87,595 | 3,60,297 |
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| EBIT Margins |
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| 1) Petrochem (10.06%)* | 2,504 | 4,392 | 1,888 | 7,328 |
| 2) Refinery (3.26%)* | 3,174 | 6,125 | 2,951 | 12,788 |
| 3) Oil & Gas (24.32%)* | 356 | 708 | 352 | 2,887 |
| 4) Others | 42 | 126 | 84 | 255 |
| PBIT | 6,076 | 11,351 | 5,275 | 23,258 |
| Less: Interest Expenses | -805 | -1615 | -810 | -3,036 |
| Less: Other Unallocated Expenses | 49 | 618 | 569 | -183 |
| Add: Interest Income | 1551 | 3179 | 1628 | 6,245 |
| PBT | 6,871 | 13,533 | 6,662 | 26,284 |
| Less: Provision for Current Tax | -1,436 | -2,827 | -1,391 | -5,244 |
| Less: Provision for Def. Tax | 55 | 136 | 81 | -37 |
| Profit After Tax | 5,490 | 10,842 | 5,352 | 21,003 |
| EPS | 17.0 | 33.6 | 16.6 | 64.8 |
*Figures in brackets indicates % margin for Q2FY14.
Result Analysis:
H1FY14
- H1FY14 cash profit increased by 3.1% to Rs. 15,077 crore
- Operating profit before other income and depreciation increased 2.3% YoY from Rs. 14,588 crore to Rs. 14,924 crore due to higher margins in refining and petrochemicals business, which was partly offset by lower oil and gas production.
- Net addition to fixed assets was Rs. 20,154 crore including exchange rate difference capitalization, principally on account of ongoing expansions projects in the petrochemicals and refining business at Jamnagar, Dahej, Silvassa and Hazira.
Refining
- In Q2FY14, RIL’s refineries processed 17.7 MMT (highest ever quarterly throughput) of crude and achieved utilization rate of 114%. Growth in revenue was accounted by 4.9% higher volume and 11.3% increase in prices.
- Optimal utilization of refinery assets and flexibility in sourcing, product delivery aided by depreciating rupee contributed to healthy operating profits.
- Benchmark Singapore complex refining margins have softened in Q2, and the company must ensure that the GRMs do not fall further, to maintain the growth momentum in H2FY14.
Petrochem
- Significantly higher production and one-of–the-best EBIT margins of 10.06% for the petrochem segment.
- Both volume and double digit margins were positively impacted by stable demand, improved deltas for key polymers (PP/PE) and fibre intermediates (PX/MEG), favourable exchange rate movement, company’s integrated chain economics.
Others
- Upstream continues to remain a hang-over with not much visibility in FY14 and parts of FY15.
- Other Income reduced from Rs. 2,535 crore in Q1FY14 to Rs. 2,060 crore in Q2FY14, which is a positive indication as the company is earning income from core operations and not treasury gains. This will be viewed very positively by the analysts and market.
- Retail business continues to break new ground with 41% in H1FY14, despite the challenging scenario.
Verdict
- FY14 EPS estimated in range of Rs.68-69, provided consistency in petrochem business continues (should maintain double digit margins) in H2FY14. Also, GRMs should not have a negative bias, to maintain performance of refinery segment.
- Given the good results, we expect share price to touch 900 levels on Tuesday.