Reliance Industries shares opened firm on Friday ahead of its AGM, after the company late yesterday evening surprised with strong performance on its refining margins in the fiscal first quarter which boosted its financial results.
Reliance Industries shares eased from intra-day highs but were still trading firm on Friday afternoon after Chairman Mukesh Ambani launched a low-cost, ‘intelligent’, 4G-enabled Jio Phone handset, which it would distribute to its users for a refundable deposit of Rs 1,500 and no upfront cost. Reliance Industries shares soared 3.9% to a fresh nine-and-a-half year high of Rs 1,588.2 in the morning trade, and were trading at Rs 1,570.7 in the afternoon.
Reliance Industries yesterday evening surprised with strong performance on its refining margins in the fiscal first quarter which boosted its financial results, lifting the quarterly net profit up by as much as 28% on-year. Mukesh Ambani’s launch of the new 4G-enabled feature phone handset is expected to help its disruptive telecom venture Jio rapidly expand the footprint further, even as its earlier service offerings have already taken the Indian industry by storm.
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.
The results release was conspicuous in its silence on the company’s performance or plans for Jio Infocomm’s retail telecom business, leading some to believe that Mukesh Ambani has kept those plans for unveiling at the upcoming AGM later today. Reliance Jio has grown at a breakneck speed since the official rollout of services on 5 September 2016. It crossed 50 million subscribers in just 83 days, and 100 million in 170 days, adding at an average rate of six lakh subscribers per day. Mukesh Ambani said that now Reliance Jio has over 100 million paying users.
Yesterday, Reliance Jio said it will launch a rights issue of shares to raise Rs 20,000 crore to invest further into the venture which has already seen investments to the tune of just shy of Rs 2 lakh crore. Further, Reliance Industries sought to cheer the investors with an announcement of a 1:1 bonus issue for first time in nine years, as he said a 3.3 lakh crore capital expenditure cycle is now coming to an end, which will start generating free cash flows in the coming months.