According to newspaper reports, Reliance Industries announced a cut in prices of polypropylene and polyethylene, which coupled with the price cut announced a few days back (average 7%) would amount to a 16% cut price reduction. Reliance Industries (FY99 Sales Rs 14.5 bn) is India's largest private sector company. Its activities encompass polyester, fiber intermediaries, polymers, chemicals and branded textiles. The new ventures are in the core sectors of oil and gas, power and telecom. Reliance Industries is also the promoter of Reliance Petroleum Limited, which has a refining capacity of 27 m tonnes per annum.
(* - latest available price)
The sharp downtrend in prices of polypropylene and polyethylene should be a cause of concern for Reliance Industries. This is mainly due to the fact that the prices of the raw material, crude oil, have been sky rocketing. Thus, the company is likely to suffer a sharp erosion in margins if the current down trend in prices is to continue.
Reliance, however, has certain advantages over other petrochemical companies. The company now sources a large part of its requirement of petroleum products from Reliance Petroleum, a group company (50% subsidiary). This will limit the hike in price of raw materials that are sourced from RPL. Also, given the large capacities and the volume driven nature of the business, Reliance will be able to minimise the effect of shrinking margins. Lastly, the company has an excellent track record when it comes to controlling costs and recording growth even in severe downturns (witnessed over the last 2-3 years).
Whether the sharp downturn in prices is just a correction or a trend cannot be said with surety. Nonetheless, companies will be taking a serious view of this sharp correction or downtrend.
For the quarter ended September 2020, RELIANCE IND. has posted a net profit of Rs 105 bn (down 7.1% YoY). Sales on the other hand came in at Rs 1,162 bn (down 23.6% YoY). Read on for a complete analysis of RELIANCE IND.'s quarterly results.
Here's an analysis of the annual report of RELIANCE IND. for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of RELIANCE IND.. Also includes updates on the valuation of RELIANCE IND..
For the quarter ended June 2020, RELIANCE IND. has posted a net profit of Rs 129 bn (up 27.8% YoY). Sales on the other hand came in at Rs 912 bn (down 43.5% YoY). Read on for a complete analysis of RELIANCE IND.'s quarterly results.
Here's an analysis of the annual report of RELIANCE IND. for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of RELIANCE IND.. Also includes updates on the valuation of RELIANCE IND..
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