Reliance Industries Ltd (RIL) reported a strong set of numbers for the three months ended December 2017, beating street estimates on all fronts. Boosted by volume increase with the start-up of petrochemicals projects and increase in prices in refining and petrochemical businesses, consolidated net profit excluding exceptional items increased a sharp 25.1% year-on-year to Rs 9,423 crore. Gross refining margins came in at $11.6/bbl against $10.8/bbl in Q3FY17, in line with street estimates. But EBIT (earnings before interest and tax) for the refining and marketing business marginally fell 0.5% y-o-y to Rs 6,165 crore during the period. RIL’s gross refining margins (GRM) outperformed Singapore complex refining margins by $ 4.4/bbl. Petrochemicals segment EBIT was at a record level of Rs 5,753 crore supported by strong volume growth, higher margins for Polypropylene and downstream polyester products. The volume growth was led by the world’s largest ROGC coming on-stream. The company recorded revenues of Rs 109,905 crore crore, an increase of 30.5% y-o-y. Increase in revenue is primarily on account of volume increase with start-up of petrochemicals projects and increase in prices in refining and petrochemical businesses. The increase in consolidated revenues reflect robust growth of 116% in retail business and continued enhancement in Jio’s wireless operations.
Revenue from the retail business for the quarter more than doubled to Rs 18,798 crore. RIL’s operating profit before other income and depreciation increased by 52% y-o-y to Rs 17,588 crore. Strong operating performance was driven by growth in petrochemicals, retail and digital services businesses along with firm refining margins. RIL’s outstanding debt as on December 31, 2017 stood at Rs 2.13 lakh crore versus Rs 2.14 lakh crore at the end of September 2017 and Rs 2 lakh crore as on June 2017. Finance cost increased a sharp 74% y-o-y to Rs 2,095 crore. This increase is primarily due to lower capitalization of finance cost related to commencement of digital services business (Rs 712 crore) and higher loans balance partially offset by exchange rate variation during the quarter.
The capital expenditure for the quarter ended 31st December 2017 was Rs 17,336 crore including exchange rate difference capitalization. Capital expenditure was principally on account of digital services business, balance of expenditure for projects in the petrochemicals and refining business at Jamnagar and in organized retail business. Of the Rs 17,000 odd crore capex, Rs 7,000 crore was on account of Jio, Rs 6,000 crore for RIL, Rs 2,000 crore in retail and remaining Rs 2,000 crore in other sectors.