Mukesh Ambani-led Reliance Industries (RIL) became the first private sector firm to report revenues exceeding 1 lakh crore in a quarter. Public sector unit Indian Oil Corporation (IOC) is the only other Indian company in the select group.
Driven by higher exports realization due to a falling rupee, RIL reported a 14% growth in revenue to 106,523 crore in the July-September quarter. However, its profitability could not keep pace with revenue growth as it reported its slowest growth in profit in the last four quarters due to subdued refinery margins. Even so, RIL beat market expectations with a marginal 1.5% increase in net profit to 5,490 crore.
It earned $7.7 for every barrel of crude it processed, compared with $9.5 a barrel a year ago and $8.4 a barrel in the June quarter.
The good news is that RIL’s core business has started contributing significantly to profitability and its reliance on “other income” to boost profitability has reduced.
For instance, in the June quarter, the contribution of “other income” to profit before tax was about 38%, which got reduced to 30% in the September quarter. It’s being seen as a welcome sign by the analyst community.
“Our diversified and integrated petrochemicals business captured margins across segments — delivering near-record profit levels even as the domestic economy slowed,” said RIL chairman Mukesh Ambani. The refining business, which contributed about 80% to total revenues, saw its EBIT fall 9.9% to Rs 3,174 crore due to weak refining margins in the quarter. The petrochemicals business, which contributed 20% to RIL’s total revenues, saw its EBIT grow 44% to Rs 2,504 crore.