RIL Q3 beats the Street with help from Reliance Jio, Retail2 min read . Updated: 19 Jan 2019, 08:48 PM IST
- RIL posted a net profit of ₹10,251 crore in Q3, up 8.82% from a year-ago
- Revenue came in at ₹1.71 trillion, up 56% year on year
Mumbai: Reliance Industries Ltd (RIL) on Thursday said fiscal-third quarter (Q3) profit rose 8.82% from a year earlier, driven by higher price realizations in its petrochemical, telecom and retail businesses. Net profit rose to ₹10,251 crore in the three months ended 31 December from ₹9,420 crore in the year earlier. Revenue grew 56% to ₹1.71 trillion from ₹1.09 trillion. The company was expected to post a profit of ₹9,476.3 crore on a revenue of ₹1.4 trillion, according to consensus estimates of analysts surveyed by Bloomberg.
“In an oil price environment that witnessed heightened volatility through the quarter, we’ve delivered strong Q3 results on a consolidated basis," said chairman and managing director Mukesh Ambani.
RIL’s consumer businesses reported Ebitda (earnings before interest, tax, depreciation and amortization) growth of 25% in Q3.
“In our new-age consumer businesses, we maintained robust growth momentum across retail and jio platforms and the share of consumer businesses is steadily increasing its contribution to the overall profitability of the company," he added.
Ambani is betting on the company’s consumer businesses—Reliance Retail and Reliance Jio—to double sales in about seven years and expects the businesses will contribute nearly as much to overall earnings as its energy and petrochemical businesses.
Its telecom arm, Reliance Jio Infocomm Ltd, saw its profit grow 65% to ₹831 crore from ₹504 crore a year ago, its fifth straight profitable quarter. Revenue for digital services rose 51% to ₹12,302 crore. During Q3, Reliance Jio added 28 million users for a total of 280 million.
“Jio phones have done quite well. Subscriber run rate has been good. Jio’s performance there with multiple things going on in the previous quarter, there were some special schemes that were contributing. Arpu (average revenue per user) is ₹130 and we see strong engagement of voice, data and apps," said Anshuman Thakur, head (strategy) at Reliance Jio.
RIL’s organized retail business saw profit nearly triple from that of last year because of better festive sales and aggressive store expansion. Reliance Retail’s revenue rose to ₹35,577 crore from ₹18,798 crore in the year earlier. Healthy festive season sales and new store openings resulted in another robust quarter, the company said.
Product prices for the refining and petrochemicals business increased in line with Brent crude oil price, which was 10.4% higher on average. The higher volumes in the petrochemical business were on account of stabilization and ramp-up of new petrochemical facilities.
Gross refining margin (GRM), however, came in at a 16-quarter low of $8.8 per barrel against $11.6 per barrel that it reported a year ago. GRM is what a refiner earns by turning a barrel of crude oil into refined products.
Oil prices fell sharply during Q3 with Brent averaging at a five-quarter low of $67.5. Refining margins fared worse, falling to an eight-year low of $4.3 per barrel. Singapore gross refining margin declined to a nine-year low in December to average $2.9/bbl from $4.7/bbl in the previous month.
RIL’s debt rose to ₹2.74 trillion at the end of December from ₹2.19 trillion as on 31 March.
“You have seen the announcement about that we are going to demerge our tower and fibre business. It all means that eventually, you are going to see a lot more of the reverse cash flow and strengthening of the balance sheet. The intensity of capital expenditure will also come down," said V. Srikanth, joint chief financial officer.