Energy-to-digital conglomerate Reliance Industries on Friday reported a consolidated net profit of Rs 13,806 crore (Rs 12, 273 including GST) for the quarter ended June 30, ahead of market expectations, and 67 percent higher year-on-year.
Revenues jumped 58 percent year-on-year to Rs 158,862 crore (Rs 1.40 lakh crore including GST) driven by better price realization in the oil to chemicals (O2C) business, higher revenues in the oil and gas business, and a strong performance in the digital services business.
Speaking to CNBC-TV18, Probal Sen, senior Vice-President at Centrum Broking said, "On the face of it the earnings look broadly in-line with what we were looking at. The retail numbers look a little bit better, most of us were working with 20 percent plus decline in revenue and the decline seems to be in the range of around 15-16 percent. On that front, I think the fact that month of June has come back so strongly despite April and May being so weak, is a good sign. Jio Platforms again I think is broadly in-line with what we were looking at. O2C seems to be tad weaker than what our numbers were suggesting. So on the whole no big surprises except for a fact that retail recovery in June has been a bit more encouraging."
Abhijeet Bora, AVP of Fundamental Research at Sharekhan by BNP Paribas said, "O2C numbers are looking better than expected but I think it also includes other income. More importantly rather than quarterly numbers any potential deal in the O2C business would be a trigger because recovery is likely to remain gradual."
Amnish Aggarwal, Head of Research at Prabhudas Lilladher said, "The current quarter for Reliance Retail was that of heightened uncertainty due to reluctance of people to go to stores and do any sort of shopping. However things have started picking up for the industry in the month of July but one needs to watch out for any third COVID wave. Over a period of time for retail as a sector and Reliance in general one should look for the trends over the next 6-12 months because once the COVID completely goes off and people start leading a normal life, doing normal shopping and all, I think then the things will be much better."
Sudip Bandyopadhyay, Group Chairman of Inditrade Capital said, "The big picture is pretty well known, in the AGM, Mr Mukesh Ambani did articulate the green energy plans which is also quite impressive, but having said I think the market is waiting for the execution to kind of start showing colours. As far as the investors are concerned they are all in place, in both retail to an extent and I would say as far as platform is concerned, the telecom part investors are all in place. O2C, I think we will wait for the contours of the deal with Saudi Aramco to emerge and that should give boost to the market price depending on the nature of the deal. But otherwise as far as the new energy piece is concerned execution will be the key and people will wait to see the execution skills and execution efficiency. As far as retail is concerned, I think while people are aware of something big getting created there is lot of wait for the execution and the real numbers to start coming in. Unfortunately, the Q1 was a COVID affected quarter so probably we are not fair in judging their performance by Q1 particularly retail but people will wait and watch."
Bandyopadhyay said, "We have been advising investors to acquire Reliance if you have one year time horizon and we maintain our view as far as that is concerned. We have a target of Rs 2500 and that is a very decent target for Reliance in the near future."
Market Expert Prakash Diwan said, "Retail is work-in-progress for Reliance, it is not something that they have kind of reached a stage of stability where they are looking at maturing the stores. You have the store expansion going at a pace which is remarkable. It puts them at a far higher delta as compared to the second best name in the industry. So I think the street will not mind a little bit of coming off of the topline because it is obvious that topline and the EBITDA would have suffered the impact of the second wave. But here you have a business which is galloping ahead not just growing but galloping ahead to reach a scale which will become fairly secular, fairly resilient in terms of any kind of volatility. I am absolutely convinced, there is no question on that and it is just a matter of when does the growth come in from, what kind of parts, what are the vectors that bring it and that we will see if the commentary gives some indication."
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