Mumbai/Bengaluru — Reliance Industries Ltd’s June-quarter profit rose 7%, as double-digit growth in the Indian conglomerate’s retail and telecoms businesses helped offset its worst oil refining margins in 18 quarters.
The company, led by Asia’s richest man Mukesh Ambani, said on Friday revenue from its retail and telecom operations jumped over 40% each, helping net profit rise to 101.04 billion rupees ($1.47 billion) in the first quarter. Analysts on average had expected profits of 96.96 billion rupees, according to Refinitiv data.
In a letter to shareholders, Ambani flagged “challenging” conditions in the company’s oil refining business but expressed confidence about its consumer businesses. “We are witnessing strong traction across consumer baskets,” said Ambani, Reliance Industries’ chairman and managing director.
Mumbai-headquartered Reliance, which operates the world’s biggest refinery complex, is bolstering consumer-focused units such as retail and telecoms, to match revenues from its dominant refining division.
Together, revenue from retail and digital services – which houses its telecoms unit Jio – made up about a third of Reliance’s overall revenue from operations of 1.61 trillion rupees.
Revenue from the retail unit, which runs supermarkets and a network of speciality stores, has doubled or grown at above 50% in each of the last four quarters. In May, the company also announced a deal to buy British toy store chain Hamleys.
Meanwhile, Jio signed up 24.5 million more subscribers in the June quarter, and government data on Friday showed that the telecoms group had become India’s second biggest by subscribers, helped by cut-throat prices it began offering after its launch in 2016.
Separately on Friday, Reliance said Canada’s Brookfield Asset Management would invest 252.15 billion rupees ($3.66 billion) in a trust controlled by Reliance that owns its telecom tower assets. The deal will help the trust repay debt to Reliance.
REFINING UNDER PRESSURE
Reliance’s revenue from refining and marketing rose, but earnings before interest and taxes fell 15% as refining margins declined.
Average gross refining margin, or the money earned on each barrel of crude processed, came in at $8.1 per barrel for the June quarter, the lowest in 18 quarters but outperforming the benchmark Singapore complex margin by $4.5 per barrel.
Crude prices have risen 23% this year, increasing costs and squeezing margins for oil refiners.
“Gasoline margins have been impacted due to weak demand growth, with high pump prices and strong refinery runs leading to rising inventories,” Ambani told shareholders.
Standalone profit, which reflects Reliance’s refining, petrochemicals and oil and gas production businesses, was 90.36 billion rupees. ($1 = 68.7970 Indian rupees)