Mumbai/New Delhi: Oil-to-telecom conglomerate Reliance Industries Ltd (RIL) on Friday reported 18.3% year-on-year increase in net profit for the September quarter to a record 11,262 crore, backed by strong performances by retail and digital services businesses.

Consumer-facing businesses offset weaknesses in the refining, oil and gas, and petrochemical businesses, as RIL’s net profit increased from 9,516 crore in the year-ago period, beating street estimates, which had pegged the profits at 11,078 crore.

During the quarter, RIL’s revenue rose 4.8% from 1.56 trillion in the year-ago period to 1.63 trillion. Eleven analysts had estimated quarterly revenue at 1.53 trillion.

Ahead of its Q2 results announcement, shares of RIL touched a new 52-week high of 1,427.90 apiece on Friday, taking the company’s market capitalization to more than 9 trillion—the first Indian company to cross the threshold.

“These excellent results reflect the benefits of our integrated oil to chemicals (O2C) value chain and the rapid scale-up of our consumer businesses. During this quarter, our O2C businesses gained from favourable fuel margins environment, feedstock sourcing flexibility and higher petrochemicals volumes," said Mukesh Ambani, chairman and managing director, RIL.

Ambani said Reliance Retail delivered a robust performance with record quarterly revenues and earnings before interest, taxes, depreciation and amortization, or Ebitda. “Our digital services business is recognized for having the nation’s widest 4G wireless network," he said.

“The business continues to seize the large market opportunity in the country through expanding its presence—covering the breadth of consumption baskets of groceries, consumer electronics and fashion and lifestyle across geographies," RIL said. It opened 337 stores during the quarter.

(Graphic: Santosh Sharma/Mint)
(Graphic: Santosh Sharma/Mint)

Reliance Jio Infocomm Ltd, RIL’s telecom subsidiary, posted net profit of 990 crore for the September quarter, up 45.4% year-on-year, as data consumption surged on the back of more subscribers joining the network. The company’s operating revenue rose 33.7% year-on-year to 12,354 crore. Despite the growth in operating revenue, its average revenue per user, or ARPU, fell for the seventh consecutive quarter as most new subscribers were low-paying users.

ARPU—the total revenue of the operator divided by the number of users or connections on its network—stood at 120 with 355.2 million subscribers at September end.

Jio’s ARPU fell 15.6% from 154 in the December 2017 quarter to 130 in the corresponding quarter of 2018 and to 126.2 in the March 2019 quarter. It was 122 in the June quarter.

Anshuman Thakur, head strategy, Reliance Jio Infocomm, said: “At this point we are more focused on creating a digital ecosystem and not ARPU. All our customers continue to be very active and that is our priority—to get more customers to create a digital ecosystem."

RIL’s retail business saw its segment revenue at 41,202 crore for the quarter, up 27%.

RIL’s gross refining margin (GRM), or the amount a refiner earns by refining one barrel of crude oil, came in at $9.4 a barrel. GRM for the corresponding period of last year was $9.5 per barrel. Analysts had expected RIL’s GRM in the range of $9.5-$10.5 per barrel.

Revenue from the refining and marketing segment decreased 1.6% to 97,229 crore, reflecting lower crude prices during the quarter, while the segment’s Ebit margin came in at 5.1% against 5.4% in the corresponding quarter of last fiscal year.

Revenue from the petrochemicals segment dropped 11.9% to 38,538 crore in the September quarter from 43,745 crore in the second quarter of the last fiscal year. Segment Ebit margin decreased by 6.4% year-on-year to 7,602 crore, primarily due to weaker petrochemical product margins offset by record petrochemical production and cost optimization through light-feed cracking, RIL said. “Demand environment is clearly weak but some of the margin expansion with regard to the international maritime organization regulations you have seen now could have been potentially higher," V. Srikanth, joint chief financial officer, RIL, said.

RIL’s outstanding debt as on 30 September was 2.91 trillion, compared to 2.87 trillion on 31 March. Cash and cash equivalents as on 30 September were at 1.34 trillion, compared to 1.33 trillion on 31 March. The capex for this quarter was 19,095 crore.

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