Mukesh Ambani-led Reliance becomes the first private company to earn Rs 10,000 crore quarterly profit

Reliance Industries (RIL) reported a strong set of numbers for the three months ended December 2018, beating Street estimates on all fronts. The company’s consolidated net profit increased nearly 9% year-on-year to Rs 10,251 crore.

With the profit of over Rs 10,000 crore, RIL has become the first private sector company to cross this number.

Revenue from operations on consolidated basis increased almost 56% y-o-y to over Rs 1.71 lakh crore. Increase in revenue is primarily on account of higher price realisations and volumes for petrochemical and refining businesses along with continuing strong growth momentum in consumer businesses. Consensus estimates from Bloomberg projected the revenue from operations for Q3FY19 at `1.40 lakh crore.

Gross refining margins (GRMs) fell for the fourth quarter in a row to $8.8/barrel (bbl) against $11.6/bbl in the quarter ended December 2017. However, outperforming Singapore complex margins by $4.5/bbl.

“Soft refining may exacerbate OMCs’ earnings concerns even if core margins in Q3FY19 benefit from pricing lags,” analysts at Jefferies had said in December.

The company reported a 20% y-o-y rise in the PBDIT (profit before depreciation, interest and tax) to `23,801 crore. The growth in operating profit was led by strong operating performance in petrochemicals, retail and digital services businesses.

Outstanding debt for RIL as on December 31, 2018, was Rs 2,74,381 crore compared to Rs 2,18,763 crore as on March 31, 2018. V Srikant, chief financial officer, RIL, told newspersons, “With the kind of earnings momentum coming on the consumer business side and with the asset monetisation planned for the fibre business, the balance sheet next year will be stronger”.

RIL’s finance cost was at Rs 4,119 crore against Rs 2,095 crore a year ago. This increase is primarily on account of commencement of petrochemical projects at Jamnagar and Digital Services business. Higher loan balances also contributed to the increase in finance cost. Cash and cash equivalents as on December 31, 2018, were at `77,933 crore. These were in bank deposits, mutual funds, CDs, government bonds and other marketable securities.

Growth in petrochemical business further improved, with revenues rising over 37% y-o-y to Rs 46,246 crore due to rise in price realisations and volumes primarily in polymer products and fibre intermediates. Petrochem segment Ebit (earnings before interest and tax) was up 42.9% y-o-y at `8,221 crore. Strong volume growth and robust polyester chain margins offset the impact of weaker polymer margins. The y-o-y volume growth was led by successful stabilisation of ROGC, its downstream units and new PX facility at Jamnagar.

The segment revenue of refining and marketing (R&M) business, which contributes to 80% of the total revenue, saw an increase of 47.3% to over Rs 1.11 lakh crore against Rs 75,865 crore at the end of December 2017. Segment Ebit declined by 18% y-o-y to `5,055 crore due to a decline in light distillate product cracks on a y-o-y basis.

Chairman Mukesh Ambani said, “In an oil price environment that witnessed heightened volatility through the quarter, RIL has delivered strong quarterly results on a consolidated basis. Competitive cost positions and integration benefits is core to our oil-to-chemicals business, driving sustained performance even in challenging global business environment.”