Reliance’s Profit Beats Estimates on Telecom, Retail Boost

(Bloomberg) -- Reliance Industries Ltd.’s quarterly profit rose 18% from a year earlier beating analyst estimates, bolstered by telecommunications, retail and stable refining margin.

• India’s biggest company by market value posted a consolidated net income of 112.6 billion rupees ($1.58 billion) in the three months through September, against 95.2 billion rupees a year ago, it said in an exchange filing. That compares with the 110.8 billion-rupee average of estimates compiled by Bloomberg.
• Sales at the oil refining-to-retail giant expanded to 1.52 trillion rupees.

Key Insights

• Reliance has invested billions of dollars into new businesses such as telecom, retail and digital services. That bet is paying off, with the new ventures contributing about a third of its earnings and Reliance Jio Infocomm Ltd. becoming India’s biggest wireless carrier during the quarter.
• The company’s billionaire owner Mukesh Ambani said in August that the new businesses are likely to contribute 50% of Reliance’s earnings in a few years. Profit growth will empower Asia’s richest man to take on Amazon.com Inc. and Walmart Inc. in the retail business and prepare for the rollout of 5G mobile services in the world’s second-most populous country.
• Stability in refining will help fetch a higher valuation for Ambani’s oil-to-chemicals business, in which Saudi Aramco plans to pick up a 20% stake. The Aramco deal is crucial for the Indian conglomerate’s aim to become a zero-net-debt company by March 2021.
  • Refining margin was stable at $9.4 a barrel as profits from converting oil to fuels such as gasoline surged because of tightening global supplies after attacks on Saudi Arabia last month.

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• Net income at its telecom unit, Reliance Jio Infocomm, rose 45.4% to 9.9 billion rupees from 6.81 billion rupees last year. Average revenue per user came in at 120 rupees a month on a subscriber base of 355.2 million at the end of September.
• Reliance Retail’s net profit during the quarter increased 56% to 11.48 billion rupees, according to the statement.
• Reliance Industries’ finance costs were 54.5 billion rupees, while total costs stood at 1.41 trillion rupees.
• Outstanding debt at the parent amounted to 2.92 trillion rupees, while cash reserves stood at 1.35 trillion rupees at the end of September.

To contact the reporter on this story: Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net

To contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Alpana Sarma, Abhay Singh

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