RIL fires on all cylinders, Q3FY18 net rises 25%

Strong operating performances across its petrochemicals, refining, retail and telecom businesses help the conglomerate post record earnings in the December quarter, even as Jio reports first quarterly net profit

Published: Jan 19, 2018

Over a decade in financial journalism, I have specialized in covering news that matters to India Inc. and its stakeholders, including developments at India's largest corporations and and MNCs. The subject of my writing has been analysis of strategy, financial performance, M&A and fundraising activity, consumption behaviour and emerging trends in management and leadership. Industry verticals that I have written on include oil & gas, power, infra, metals & mining, auto, telecom, FMCG & retail, and start-ups. I also play the role of an editorial lead for proprietary events like the Forbes India Leadership Award and the Forbes India CEO Dialogues. An alumnus of Asian College of Journalism, Chennai and Jadavpur University, Kolkata, I have worked for publications such as Mint, The Financial Express and The Indian Express before this.

g_102627_reliance_280x210.jpgImage: Amit Dave / Reuters


Reliance Industries Ltd (RIL), the Mukesh Ambani-led conglomerate whose interests range from oil-to-yarn and retail-to-telecom, fired on all cylinders in the October-December 2017 quarter to post a robust year-on-year rise of 25 percent in net profit to Rs 9,423 crore, beating Street expectations.

The growth in net profit came on the back of 30.5 percent year-on-year rise in consolidated revenues during the third quarter of fiscal 2018 at Rs 1,09,905 crore. The growth in topline and bottomline during the quarter is attributable to strong segmental earnings across RIL’s crude refining, petrochemicals, retail and telecom businesses.

On a sequential basis, RIL’s reported turnover in the December 2017 quarter was up 8.6 percent and net profit was up 16.2 percent.

The highlight of the quarter was that Reliance Jio, the conglomerate’s mobile telephony and digital services business turned in a net profit on only the second quarter after commencing commercial operations. On a standalone turnover of Rs 6,879 crore, up 11.9 percent from the preceding quarter, Jio reported its first net profit of Rs 504 crore. This makes Jio the only telecom player to report a profit from its Indian wireless business during the quarter. The telco, which has notched 160.1 million subscribers at the end of December 2017, reported a profit before depreciation, interest and tax of Rs 2,628 crore in the October-December 2017 period, up 82.1 percent sequentially. Jio also saw a healthy average revenue per user of Rs 154 per month in this period.

“I am happy to share record-setting consolidated quarterly earnings to mark the 40th anniversary of Reliance’s listing in January 1978. Fittingly, this quarter marks the culmination of our petrochemicals expansion projects and the first positive net profit contribution from our newest business line – digital services,” Ambani said in an earnings statement issued on Friday after market hours. “Our refining business has delivered 12 consecutive quarters of double digit refining margins, demonstrating operating excellence and healthy industry fundamentals. Benefits of the large investments in petrochemical business are beginning to show with the segment reporting its highest-ever earnings.”

Ambani further added that Jio’s strong financial result reflected the “fundamental strength of the business, significant efficiencies and right strategic initiatives.”

RIL attributed the growth in its earnings to higher volumes in its petrochemicals business with new capacity coming on stream post the expansion project, increase in prices across the petrochemicals and refining business and higher revenues from the retail and telecom business.          

In the refining and marketing business, RIL reported a gross refining margin (GRM) – or the difference between the value of petroleum products sold and value of crude refined – of $11.6 per barrel, which was higher than the $10.8 reported in the same period last fiscal, but marginally lower than the GRM of $12 witnessed in the sequentially preceding quarter. Revenues from this business was higher due to higher Brent crude prices. The marginal quarter-on-quarter weakness in GRM was due to lower gasoline, gasoil and fuel oil spreads, which also led the regional benchmark Singapore GRM to average $7.2 during the quarter, compared to $8.3 in July-September 2017 quarter.

RIL’s retail business, spanning across formats such as consumer durables, apparel and grocery retail, witnessed a sharp rise in revenue and operating profit during the quarter. Turnover from the business grew 116.4 percent year-on-year to Rs 18,798 crore and earnings before interest and tax grew 110.8 percent to Rs487 crore.

As on December 31, 2017, RIL has a net debt of Rs 1,34,589 crore; and cash and cash equivalents of Rs 78,617 crore.    

(Reliance Industries is the owner of Network 18, publisher of Forbes India)

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