Good Morning Toasters!

Hey guys!! Phews, it’s the weekend and there’s some respite from the slippery slope the markets are treading on at the moment. Let’s take a couple of days off, before we get back to the mayhem, eh?

In today’s issue, we cover India’s favourite company, Reliance Industries, which dropped a record quarter. Hey, why wouldn’t they? Have you seen the price of crude? Nonetheless, there is ARPU growth at Jio and strong new store addition at Retail to consider as well.

Uber Technologies dropped their numbers, recording strong growth in Global Mobility Numbers on its platform, indicating a strong demand comeback. Uber is finally close to being cash-flow positive and ideally would’ve been, if not for its previous equity investments that seem to have not performed ideally.

And finally, we’ve started a rollout of our newest product, Trade:able, that aims to democratise trading, via a unique and fun learning experience. There are a bunch of amazing rewards and prizes to win. Click here to know more

Market Watch

Nifty 50: 16411.30 | -271.40 ( -1.63%)
FII Net Sold: INR 5,517.08 crore

Sensex: 54835.58 | -866.65 (-1.56%)
DII Net Bought: INR 3,014.85 crore

Global Tech News

Uber records 1.7 Bn trips during the quarter; what’s up and what do you need to know?

• The world’s OG mobility player and your 1 am saviour, Uber Technologies dropped a quarter reminiscent of pre-pandemic days, providing an indication of a full-blown recovery across the movement, supply chain and travel
• Now more than just a ride-hailing application, with businesses across delivery, freight and mobility, Uber recorded gross bookings (think: Gross Merchandise Value in e-commerce) of ~USD 26.4 Bn during Q1FY22, a growth of ~35% YoY
• Revenue grew by 136% YoY to USD 6.9 Bn during the quarter, comfortably arriving at the higher end of the guided range; both Mobility (ride-hailing) and Delivery (Uber Eats) contributed in equal proportions to the overall topline (~USD 2.5 Bn each)
• From a gross-bookings perspective (think GMV for Uber), the delivery business is now a bigger contributor to Uber’s overall Gross Booking share, showing a major new business line created by the company, since a little before the pandemic began
• The company’s newest business line, Freight, recorded 245% YoY growth primarily via the acquisition of Transplace in November 2021; excluding the acquisition, the business grew by 27% organically, touching USD 386 Mn in topline

Interesting! What about costs, and business metrics? Give me some more information?

• The company recorded a net loss of USD 5.9 Bn for the quarter, with a major caveat included; ~USD 5.6 Bn is attributable to Uber’s equity investments in Uber Grab, Aurora and Didi (remember the Chinese ride-hailing co. Uber invested in?), with the remainder pegged to stock-market compensation expense
• Trips on the platform (as a whole) increased by 18% YoY to 1.7 Bn, driven in equal measure by mobility and delivery, which roughly translates to 19 Mn trips per day during the quarter
• The number of monthly active platform consumers touched 115 Mn during the quarter, which was up 17% YoY, indicative of the rapidly increasing consumer activity, globally
• Drivers and couriers (Uber Eats) earned an aggregate of USD 9 Bn during the quarter, up 39% YoY, outpacing the overall Gross Bookings growth of 35% YoY, indicating a net win

Nice! Anything else? Stock performance, competition et al.?

• The nos we’re enough to impress investors, with Uber’s stock down ~5% post results were declared; competitor Lyft, with a smaller revenue base, suffered greater, with its stock down ~25% in post-market hours
• Both companies shared starkly different outlooks for Q2, with Uber indicating buoyancy and an expectation of outperformance, while Lyft shared challenges with respect to driver availability
• Regardless, the Uber CEO revealed a return to pre-pandemic demand, with Mobility Gross Bookings exceeding 2019 levels across metrics, indicating a return to the ‘old ways’
• While at an accounting level Uber lost money during the quarter, however excluding certain expenses the company had another profitable quarter, with its free cash flow now approaching a break-even point
• The company expects to continue on its growth path (mentioned above), albeit with the major requirement to increase the number of drivers on its platform

Keep a track?

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Around the World 🌎

• Fed lifts interest rates finally – The US Fed has approved a half-percentage point interest rate hike (the largest since 2020) and plans to shrink its $9 trillion asset portfolio in a bid to slow inflation which is currently at a 40-year high. The move will raise the benchmark federal-funds rate to a target range between 0.75% and 1%. Officials also agreed that increases are warranted in June and July. Markets however reacted positively as the Fed ruled out the possibility of a 75 bps hike, with the  Dow Jones Industrial Average gaining 2.8% and yields on Treasury notes falling
• DoorDash on a good momentum – Revenue last quarter for DoorDash increased by 35% YoY to $1.46 billion as consumers continued to get food and household essentials delivered in spite of more restaurants and stores reopening. Major competitor UberEats saw a 12% revenue growth. Order volumes grew on both these platforms but fell on another rival GrubHub’s platform. DoorDash’s market share rose to 57% from 44% a year earlier. Shares rose > 7% in after-hours trading
• Keeping the EV saga alive – Electric car maker Lucid will be increasing vehicle prices starting June in a bid to make its losses even smaller. It recorded a net loss of $81.3 million (vs $2.9 billion) in the first quarter of the year with a revenue of $57.7 million (up from $313,000). The company plans to honour pricing for those who booked before June. Rivals such as Rivian Automotive Inc. and Tesla Inc. have also raised prices on some of their models. Lucid shares are down about 51% since Jan. 1 and closed down 7% Thursday

Conglomerate News

Reliance Industries crossed USD 100 Bn in revenue for FY22; what’s up and what do you need to know?

Disc: this update is not exhaustive, it is not possible to cover RIL results in such a short form. We’re sorry 🙄

Consolidated Results (including Petrochemicals, Retail, Jio and others)

• India’s most famous company, dropped its results for the quarter (and year) recording revenue growth of 47% YoY (wild 🤯) to INR 792,756 Crores (USD 104.6 Bn) for FY22, becoming the first Indian company to do so
• All three major business lines, including RIL (Oil to Chemicals), Jio and Reliance Retail recorded strong growth, led by RIL (duh!!) growing 67% during the year, followed by Retail and Jio Platforms
• The company recorded a net income of INR 67,845 Crores (USD 9.0 Bn), which was higher by 26.2%, YoY, with RIL contributing >50% of the profit %, followed by Jio and Retail in decreasing proportions

Consolidated Strategic Updates

• Jio Platforms Limited (JPL) announced the formation of a joint venture with SES, a leading global satellite connectivity solutions provider, to launch scalable broadband services in India, leveraging satellite technology
• JPL announced the investment of USD 15 Mn in Two Platforms, for the development of immersive and interactive AI Experiences (Metaverse in-coming)
• Viacom18 announced a partnership with Bodhi Tree Systems, which will invest INR 13,500 Crores and aim to transform the network into the largest TV and digital streaming platform in the country (the first task = submit a massive bid for IPL)

Interesting! Can I get some division wise details?

Jio Platforms Limited

• The company recorded an Average Revenue Per User (ARPU) growth of 10.6% to INR 167, from INR 151 in Q3, on the back of tariff hike, better subscriber mix and ramp-up of Fiber to the Home (FTTH) services
• EBITDA % for the business expanded to a wild 50.3%, led by ARPU
• The company recorded a 4.8% growth in total data traffic, touching 24.6 Bn GB while adding 35.5 Mn new subscribers during the quarter
• The company conducted significant 5G on-field trials in 8 states, with a peak user throughput of 1.5 Gbps achieved; the government has indicated a timeline of June – July for 5G auctions

Reliance Retail

• The company recorded net revenue growth of 23%, led by the increase in retail space, with performance across multiple business lines, including Grocery, Fashion and Electronics Segment
• EBITDA & Net Income for the quarter declined, growing slower than revenue growth
• The company opened >2500 stores during the year, taking the total count to >15,000 operational stores, covering a total area of 41.6 Mn Sq. ft, comfortably the largest player in the country

Consolidated Oil to Chemicals (O2C)

• Revenue for FY22 increased by 56.5% YoY to INR 500,900 Crore (USD 66.1 Bn) primarily on account of an increase in crude oil prices and higher price realisation
• Volumes also increased by 7.5%, primarily led by transportation fuels adding to the overall high demand scenario and accordingly positively impacting revenues
• Production from the famed KGD6 basin, coupled with higher gas price realisation in KG D6 and CBM basics helped in higher revenues in the core RIL business

Damn, that’s a lot of information! Wrap it up please? (Yess my man)

• Core business performance, across Petrochemicals, Jio and Retail was along expected lines, leveraging market scenarios to build out each business
• Net Debt for the company jumped exponentially, from INR 28.6 Bn in Q3 to INR 348.2 Bn in Q4, with capital expenditure (CAPEX) incurred during the quarter coming in at INR 301.7 Bn
• The stock has been strong Year-to-date, up 9.5%, but while the broader market has fallen considerably lately, RIL is down 7.3% in the last 5 days
• News of heightened CAPEX, in the backdrop of record numbers in each of its divisions, is likely to add a touch of negativity to the mood (we believe)

What else caught our eye? 👀

Vedantu lays off 200 employees

• Vedantu Innovation Pvt Ltd has laid off around 200, or 3.5% of its workforce of 6000 employees which included 120 contractors and 80 full-time staff
• The company said that it ‘relooks at these roles of its academics and assistant teachers with more technology intervention, restructuring of the class format, and changes in the categories’
• They are however looking to hire over 1000 employees, 100 of which are in similar roles – other startups like Unacademy and Lido Learning have also laid off employees recently

Mahindra & Mahindra to enter a new segment

• Mahindra & Mahindra Financial Services Ltd may become the first NBFC to enter the credit-card market (after the RBI approved the same if they receive regulatory approval and have a certificate of registration)
• They are looking to leverage its large customer base and employee strength (2-3 lakh employees) to gain market share
• The CEO has announced that the company is likely to post double-digit growth in assets under management (AUM) in the current fiscal year

Educational Topic of the day

Bear Put Spread

A Bull Put Spread (or Bull Put Credit Spread) strategy is a Bullish strategy to be used when you’re expecting the price of the underlying instrument to mildly rise or be less volatile.

The strategy involves buying a Put Option and selling a Put Option at different strike prices. The risk and reward for this strategy are limited.

Edited by Raunak Karwa

Let’s connect, I always love hearing from you. Hit me up at Raunak_Karwa on Twitter or Raunak.karwa@finlearnacademy.com