Reliance Industries (RIL) on Tuesday reported a strong set of numbers with consolidated profit for the three months to December surging 38.7% year-on-year to Rs 7,290 crore on the back of strong gross refining margins of $11.50 per barrel. The company’s earnings before interest and tax (Ebit) margin came in at 11%, up 535 basis points year-on-year, driven up by better margins in both the petrochemicals and refining businesses.
Chief financial officer Alok Agarwal that said at a press conference demand for refinery products remained steady, adding that refining margins would stay healthy even if crude oil prices reversed to levels of $50 per barrel.
The RIL stock gained 2.5% on Tuesday to Rs 1,043.6 on the BSE ahead of the results announcement. Since the start of 2015, the stock has put on more than 17% compared with a fall in the benchmark Sensex of 11%.
The management refrained from giving a clear timeline for the launch of 4G services via Reliance Jio, with Agarwal merely observing the launch could be “within weeks or months”.
RIL has so far spent Rs 1 lakh crore on building the capability to provide telecom services, with a third of the amount having been utilised to purchase spectrum.
RIL had announced on Monday that it planned to raise Rs 15,000 crore via a rights issue in its subsidiary RJio, with a view to improving liquidity and the debt-equity ratio. After the fund-raising, Rjio’s equity would rise to Rs 45,000 crore with debt at Rs 36,000 crore.
The management confirmed output at its trophy KG-D6 oilfield was slowing; in the December quarter, production of gas from the basin stood at 34.5 billion cubic feet, lower by 10% year-on-year. The Ebit margin from the oil and gas business has dropped to 5% from 29% in the December 2014.
The company has pruned the allocation towards capital expenditure for shale gas from $1.2 billion to $900 million given production volumes are slowing.
Capex is expected to be further lowered to $500 million in 2016.
RIL’s operating profit before other income and depreciation rose a sharp 30.8% year-on-year from Rs 8,689 crore to R11,368 crore. Strong operating performance in the refining and petrochemicals businesses, coupled with a favourable exchange rate movement, helped offset the lower contribution from the oil and gas business.
RIL reported a turnover of Rs 73,341 crore, a fall of 23.9%, from Rs 96,330 crore in Q3FY15. Outstanding debt as on December 31, 2015, was Rs 178,077 crore, while cash and cash equivalents stood at Rs 91,736 crore.