Mukesh Ambani-promoted Reliance Industries (RIL) on Friday reported a 15.1 per cent year-on-year decline in its consolidated net profit to Rs 9,567 crore for the September-ended quarter.
Consolidated net revenue also dipped 25.7 per cent year-on-year to Rs 1.11 trillion because of weak performance in the refining, petrochemicals, and retail businesses.
The profit number beat street estimates while revenue was in line with expectations. In a Bloomberg poll, 10 analysts had estimated consolidated revenue of Rs 1.11 trillion and 11 analysts estimated the company’s consolidated adjusted net income (net profit) at Rs 8,387 crore for the September quarter.
However, part of this was due to a sharp fall in tax outflow, which the company attributed to the change in the tax regime.
Analysts at Kotak Institutional Equities had estimated consolidated profit before tax of Rs 11,173 crore for the September quarter and net profit of Rs 8,283 crore, implying tax expenses of Rs 2,890 crore.
The actual profit before tax is Rs 9,554 crore and tax expenses are Rs minus 13 crore (indicating tax write-back).
Sequentially though, the performance shows an improvement as the country and India Inc exited the lockdowns and businesses restarted.
Sequentially, consolidated net revenue was up 26 per cent and profit before tax and exceptional items was up 24 per cent.
According to V Srikanth, joint chief financial officer, higher oil prices and retail growth helped in sequential growth in revenue. Besides, petrochemicals performance helped offset weak refining business.
“Eighty-five per cent incremental Ebitda (earnings before interest, tax, depreciation and amortization) came from the retail and telecom sectors. Contribution from the consumer business to the overall business is now 50 per cent,” he said.
Srikanth said a domestic and export mix for petchem was now back to an 80:20 ratio, with 20 per cent being exports. Commenting on the overall outlook, Srikanth added, “Business is back to near pre-Covid levels in terms of capacity utilisation, domestic sales, footfalls and similar indicators. Earnings are tracking FY20 levels, the same run rate as we ended FY20. The oil-to-chemicals demand supply balance is expected to normalise over the next two to three quarters. Margins are to recover with improving demand and inventory drawdown.” He added the company has made significant progress in laying the framework for RIL’s new energy and materials business.”
Funds received from various divestments and capital-raising activities by various group entities up to September are Rs 1.46 trillion. These funds were used entirely to reduce debt and other liabilities. “Another Rs 30,210 crore was received after September and Rs 73,586 crore is balance commitments,” said Srikanth.
Standalone net profit for the quarter fell 32.5 per cent to Rs 6,546 crore.
“Domestic demand has sharply recovered across our oil to chemical business and is now near pre-Covid level for most products. Retail business activity has normalised with strong growth in key consumption baskets as lockdowns ease across the country,” said Mukesh Ambani.
The company’s telecom business (Reliance Jio Infocomm) reported a net profit of Rs 2,844 crore, a three-fold increase over Rs 990 crore a year ago. Net profit from retail business was Rs 973 crore, an increase of 125 per cent. RIL recorded gross refining margins (GRM) at $5.7 per barrel for the July-September period, lower from $9.4 a year ago. Ebitda for the refining business declined by 21.4 per cent sequentially to Rs 3,002 crore primarily on account of lower middle distillates cracks and narrower light-heavy crude differentials, leading to higher crude cost. The performance was also partially affected by a planned turnaround during the quarter.