Q1 Results: Reliance Industries’ Profit Rises, Margin Narrows On Petrochemical Woes
RIL’s net profit rose 5.6 percent to Rs 9,036 crore in April-June.
Reliance Industries Ltd.’s quarterly profit rose meeting estimates even as a lower refining margin and sluggish petrochemical business continued to weigh on its earnings.
Net profit grew 5.6 percent over the previous quarter to Rs 9,036 crore in the April-June period, according to its exchange filing. Analyst estimates compiled by BloombergQuint had pegged the profit at Rs 8,618 crore. The Mukesh Ambani-led company’s profit had fallen for the first time in nearly four years in the quarter-ended March.
Revenue for three months ended June rose 5.6 percent sequentially to Rs 88,263 crore. That compares with the Rs 86,862-crore estimate.
Operating profit fell for the fourth straight quarter, dipping 0.5 percent to Rs 13,640 crore. Operating margin contracted 90 basis points to 15.5 percent.
Gross refining margin—the amount a refiner earns every barrel of crude processed—fell to $8.1 per barrel from $8.2 in the previous quarter. The Singapore gross refining margin, the Asian benchmark, averaged around $3.5 a barrel in the quarter versus $3.2/barrel in January-March.
Reliance Industries, which became India’s most-valued firm by market value last week, saw its refining business volumes increase to 17.5 million metric tonnes from 16 MMT in the March quarter. Its refining business crossed the Rs 1 lakh-crore mark in revenue this quarter. The company said in a statement it maintained significant premium over Singapore margins due to product yield optimisation and robust risk management.
Petrochemical Business Takes A Hit
The company’s revenue from the petrochemicals business fell 11.3 percent quarter-on-quarter to Rs 37,611 crore. Operating profit fell nearly 6 percent to Rs 7,508 crore over last quarter, while volumes stood at 8.7 MMT from 9.4 MMT.
The petrochemical margin will continue to remain subdued and under pressure due to the global economic conditions, said independent analyst Yogesh Mehta. “As far as the petchem margin is concerned and the ongoing global economic outlook, it seems that it will remain subdued and under pressure at least through the next two quarters.”
Citi Research had expected the petrochemical segment’s revenue to be weaker. Edelweiss had expected consolidated earnings to fall by 4.3 percent due to a decline in petchem earnings along with higher interest costs.
Other Highlights (QoQ):
- Oil and gas exploration business revenue slipped 13.7 percent to Rs 923 crore as declining volume continued to impact the business.
- Retail business revenue rose 4.2 percent to Rs 38,196 crore.
- Media business revenue increased 1.1 percent to Rs 1,245 crore.
- The company’s outstanding debt as on June 30 stood at Rs 2.88 lakh crore compared with Rs 2.87 lakh crore on March 31.
Stocks of Reliance Industries closed 1 percent lower on the BSE ahead of the earnings announcement.
Brookfield To Invest Rs 25,000 Crore In Reliance’s Tower Assets
Brookfield Asset Management Inc. has agreed to invest Rs 25,215 crore in the tower business of Reliance Industries Ltd.
Proceeds from the investment by Brookfield, made via its subsidiary BIF IV Jarvis India Pte Ltd., will be used to repay certain existing financial liabilities of tower business, according to an exchange filing. The rest will be used to acquire Reliance Industries’ 49 percent stake in Reliance Jio lnfratel Pvt Ltd., the holding company of Reliance Jio’s tower assets.