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MOSCOW (MRC) -- Shares of Reliance
Industries Ltd fell as much as 4.7% in early trade on Monday after the Indian
conglomerate posted a sharp drop in quarterly revenue from its dominant
oil-to-chemicals business, reported Hydrocarbonprocessing.
Reliance,
which operates the world’s largest refining complex, said on Friday revenue from
its oil-to-chemicals division fell nearly 30% in the three months ended Dec.
31.
Total revenue slid 21% to 1.24 trillion rupees, and the company said
its operations and revenue during the period were impacted by the COVID-19
pandemic.
Reliance, led by billionaire Mukesh Ambani, has built leading
consumer-facing businesses in recent years to diversify away from its mainstay
energy arm, but a coronavirus-driven slump in fuel demand has weighed on the
Mumbai-headquartered group’s recent results.
RIL’s cyclicals business
reporting has become opaque, with no disclosures on gross refining margin (GRM)
data this time around, BOB Capital Markets said in a note over the
weekend.
“We need to see earnings traction to justify the recent surge in
stock price as the rally factors in positives from debt reduction. O2C (the oil
to chemicals business) earnings growth remains elusive in the current
pandemic-led uncertainty,” the brokerage added.
Reliance, which did not
share the GRM, announced a reorganisation on Friday, according to which it now
houses its oil refining, fuel retailing and petrochemicals operations
together.
Reliance shares gained about 5.8% last week in the run-up to
the results but were flat for this year after a more than 32% gain last
year.
The company raised about USD26 billion last year from investors
like Google and Facebook for its digital and retail arms.
As MRC informed earlier,
in September 2020, RIL released a detailed plan to carve out its
oil-to-chemicals business into a separate entity for a potential stake sale. As
per the scheme, RIL's O2C assets, including its refining, petrochemicals, fuel
retail (majority interest only) and bulk wholesale marketing businesses, along
with its assets and liabilities, will be transferred to a new unit. The new unit
will include the refining and petrochemical plants and manufacturing assets at
RIL's Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa,
Barabanki and Hosiarpur locations.
It will also include all assets
relating to RIL's ongoing refinery and petrochemical projects that are being
commissioned or near completion, the company said. RIL had officially announced
its proposal to transfer its oil-to-chemicals (O2C) business to a separate
entity in April.
Ethylene and propylene are feedstocks for producing
polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report,
PE imports to Russia decreased in January-November 2020 by 17% year on year and
reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the
greatest reduction in imports. At the same time, PP imports into Russia
increased by 21% year on year to about 202,000 tonnes in the first eleven months
of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase
in imports.
Reliance Industries is one of the world"s largest producers
of polymers. Thus, the company produces among others polypropylene, polyethylene
and polyvinyl chloride. |
