RIL Q1 results key takeaways: Refining, petrochemicals lift net up 28% but Mukesh Ambani keeps Jio’s big launch suspense

By: | Updated: July 20, 2017 6:28 PM

Reliance Industries Ltd’s fiscal first quarter results beat street estimates, helped by a one-time gain of Rs 1,087 crore.

Reliance Industries declared its fiscal first quarter financial results on Thursday, which were bolstered by strong volumes in petrochemicals business.

Reliance Industries Ltd’s fiscal first quarter net profit grew 28% on-year to Rs 9,108 crore, while the Mukesh Ambani-controlled company’s April-June revenue rose 27% on-year to Rs 90,537 crore. The rise in earnings was broadly in line with the expectations, and was helped by strong showing in its petrochemicals business, which saw increased volumes due to a recent increase in capacities. Revenue was also boosted by robust growth in retail business which recorded a 73.6% increase in revenue to Rs 11,571 crore.

The low crude oil prices failed to play spoilsport, against expectations that it would put pressure on Reliance Industries’ refineries business and will drag the company’s refining margins from the previous quarter. Reliance Industries surprised with its GRM at $11.9 per barrel in the fiscal first quarter, growing from $11.5 barrel in the last quarter. Reliance Industries results were weighed down to some extent on the falling output at Reliance Industries’ flagship KG-D6 gas fields off India’s east coast.

“Our industry leading portfolio of assets in the refining and petrochemicals business contributed to considerable improvement in our earnings for the quarter. Retail business also witnessed accelerated growth momentum with YoY revenue growth of 74%,” Reliance Industries chairman Mukesh Ambani said in a statement.

The results release was conspicuous in its silence on the company’s performance or plans for Jio Infocomm’s retail telecom business, which has taken the Indian telecom industry by storm. Mukesh Ambani is widely expected to launch a low cost 4G-enabled feature phone handset at Reliance Industries AGM on Friday.

Gross Refining Margin

Reliance Industries again surprised on GRM, which was reported at $11.9 per barrel, growing from $11.5 barrel in the last quarter, against most analyst expectations. RIL’s GRM, a measure of realisation from making products out of crude oil, was still higher by $5.5 per barrel than the benchmark Singapore Gross Refining Margin of $6.4 barrel for the June quarter. The refining and marketing business revenue rose 18.3% on-year to Rs 66,945 crore in the fiscal first quarter, with the segment EBIT rising 13.4% on-year to Rs 7,476 crore.

Petrochemicals

Further, RIL’s first quarter revenue from its petrochemicals business, the second-largest contributor, rose 23% on-year to Rs 25,461 crore, with the EBIT (earning before interest and tax) for the segment rising 44% to Rs 4,031 crore. Earlier June, Reliance Industries successfully commissioned the third and last crystallisation train (Train 3) of its Para-xylene unit at its Jamnagar complex, doubling the company’s PX processing capacity. Reliance Industries is executing major projects in its energy and materials chain at Jamnagar covering Para-Xylene, Cracker complex along with downstream plants and Gasification.

Oil & gas exploration

However, the oil & gas exploration business revenue continued to fall on the account of lower upstream production and lower domestic gas price realisation, it said, referring to the year-on-year fall in gas output at its KG-D6 block. The segment revenue in April-June fell 1.2% on-year to Rs 13,24 crore, with the segment loss at the EBIT level widening to Rs 373 crore from Rs 312 crore a year ago.

Organised retail

Organised retail segment continued to grow at a scorching pace, with the fiscal first quarter revenue rising 73.6%% on-year to Rs 11,571 crore. “During the quarter, Reliance Retail added 18 stores across various store concepts. At the end of the quarter, Reliance Retail operated 3,634 stores across 703 cities with an area of over 13.8 million square feet,” it said.

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