Mumbai: Energy giant Reliance Industries Ltd (RIL) on Friday reported a 12.5% increase in consolidated net profit for the quarter ended September, helped by a strong performance by its refining business, and said its telecom venture was poised to turn profitable shortly.

RIL’s group-level profit rose to Rs8,109 crore in the fiscal second quarter from Rs7,209 crore a year earlier. Consolidated revenue from operations rose to Rs95,085 crore from Rs81,651 crore a year earlier.

A Bloomberg poll of four analysts had estimated consolidated net profit at Rs8,263.3 crore. A poll of three analysts had expected net sales at Rs85,785.3 crore.

Revenue was higher than forecasted because Reliance Jio Infocomm Ltd, the telecom venture, started charging for its services in the quarter. The unit, whose launch in September last year with free voice and data services has disrupted the telecom industry, made a profit at the earnings before interest and tax (Ebit) level even though it ended up with a net loss of Rs271 crore.

The telecom unit reported revenue of 6,147 crore and Ebit of 260 crore. The company said it had added 15.3 million users during the three months to September, taking its total subscriber base to 136.8 million.

Jio also reported average revenue per user (ARPU) of Rs156.4 per subscriber per month. For comparison’s sake, market leader Bharti Airtel Ltd reported ARPU of Rs154 for the June quarter. Jio also claimed average voice traffic of 2.67 billion minutes a day and a low customer churn of 1% per month. This is the first time RIL is reporting Jio’s numbers.

“I can only see it (net income) turning positive very shortly," RIL’s joint chief financial officer V. Srikanth said.

Anshuman Thakur, Jio’s strategy and planning head, said the company had achieved these numbers despite “not (being) at our full tariffs". He said that going forward, the telecom unit’s capital expenditure will be around Rs7,000 crore and the firm was keeping “options open" with respect to possible acquisitions in telecom.

“Reliance Jio numbers are very flattering. I do not know how they have managed it," said Sanjiv Bhasin, executive vice-president, markets and corporate affairs, at financial services firm IIFL Holdings Ltd. “ARPU is quite high for a company that has been in operations for just one year. Jio numbers show that it is performing and that’s also a reason why the Reliance Industries stock has outperformed the markets so sharply."

RIL shares have risen 62.34% so far this year, almost three times the Sensex gain of 21.81%.

Still, the fact remains that its refining and petrochemical businesses are the key drivers of RIL’s earnings. The firm’s consolidated operating profit increased 39.4% to Rs15,565 crore. Gross refining margin (GRM), or what the company earns from turning every barrel of crude oil into fuel, came in at a nine-year high of $12 per barrel. Analysts had expected RIL’s GRM at between $12.3 and $12.8 per barrel.

During the quarter, Singapore complex GRM was $8.3 per barrel compared with $5.1 per barrel in the previous quarter. The average Brent crude price during the quarter was up 13% year-on-year at $51.5 per barrel.

“The miss in profit after tax was due to substantially higher interest cost and higher effective income tax rate of 27.9%," said Abhijeet Bora, an analyst with Sharekhan by BNP Paribas. “With the capex cycle largely over for RIL and outlook robust for the core refining and petrochemical businesses, we maintain our buy rating."

The firm’s retail business posted an 81% jump in revenue and its Ebit doubled, led by growth in sales of digital, fashion and lifestyle and petroleum products.

Pallavi Pengonda and Reuters contributed to this story.

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