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Nachiket Kelkar
Nachiket Kelkar

BUSINESS

Reliance earnings beat street expectations on higher refining margins

Oil to telecom giant Reliance Industries on Monday reported a better-than-expected standalone net profit of Rs 8,151 crore, up 13 per cent from a year ago, boosted by a strong growth in gross refining margins. The net profit was highest ever for the quarter.

The company's standalone revenue for the January-March quarter surged 38 per cent year-on-year to Rs 74,598 crore.

Analysts, on average, had expected Reliance to report a net profit of Rs 8,010 crore, according to a poll by Thomson Reuters.

Reliance (File) Reliance Industries Limited

The company's standalone gross refining margins (earnings to convert crude oil into refined fuel) for the quarter came in at $11.5 per barrel, versus $10.8 per barrel one year ago.

On a consolidated basis, Reliance's fourth quarter net profit was up 12 per cent from a year ago to Rs 8,046 crore, while revenue rose 45 per cent to Rs 92,889 crore.

Pickup in economic growth in major global markets and oil production cuts by Organisation of Petroleum Exporting Countries (OPEC) that led to rise in oil prices helped drive the strong growth, said Alok Agarwal, CFO, Reliance Industries.

"We are now seeing a synchronised reflation around the globe. All the three major economies US, Europe and Asia are growing simultaneously. This we are seeing for the first time in a decade and is a harbinger of good things to come. Production cuts by OPEC countries are now real and with that we have seen oil prices up nearly 10 per cent over a quarter and gas prices up 20 per cent year-on-year," he said.

For the full year, the company's gross refining margins were at a eight-year-high of $11 per barrel, while petrochemical EBIT (earnings before interest, taxes) margins were at a five-year-high of 14 per cent, it said.

RETAIL BUSINESS

Reliance's retail business, which includes supermarkets, cash-and-carry wholesale stores, fashion, consumer durables and petrol pumps, saw quarterly revenue jump 83 per cent from a year ago to Rs 10,332 crore, while EBIT (earnings before interest and taxes) was at Rs 243 crore, up 90 per cent from a year ago. It should be noted that the company had merged the fuel retail business into organised retail only in July last year.

Last quarter the company opened 63 outlets and as of March 31, it had 3,616 stores across 702 cities.

RELIANCE JIO

Reliance rolled out its 4G telecom services Jio in September last year and since then has raidly scaled up through a free offer than ran till March. As of March 31, Jio had 108.9 million subscribers. Over 72 million subscribers have now opted for its paid plans, said Agarwal.

While Jio's free offer may have helped it attract more subscribers, it has hurt profitability. For the six-months ended March 31, Reliance Jio Infocomm's net loss widened to Rs 22.5 crore from a loss of Rs 7.50 crore a year ago. Jio's total income stood at Rs 54 lakh, versus Rs 2.25 crore, a year ago.

MEDIA

Network 18 Media & Investments, Reliance's media business, reported 18 per cent drop in quarterly revenue at Rs 388 crore, while EBIT plunged 90 per cent to Rs 5 crore. However, the company said that, excluding the impact of some new initiatives, its profit for the quarter was at Rs 76 crore.

"Pullback in advertising spends since November-December 2016 dragged broadcasting revenues, especially in regional markets," it said.

The company has focused on scaling up its digital platform VOOT, apart from hindi movie channel Cineplex and four regional channels launched early last fiscal year, despite a challenging market environment, it added.

Reliance shares closed up 1.2 per cent at Rs 1,416.40 on the BSE on Monday. The results were announced after markets closed.

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