Reliance Industries Q1 net profit rises 6.8% to Rs 10,104 cr; retail, telecom contribute a third of pre-tax profits

Reliance Industries on Friday reported a 6.8 percent rise in consolidated net profit for the first quarter of the current fiscal as a share of consumer businesses of retail and telecom rose sharply.

Net profit in April-June stood at Rs 10,104 crore while consolidated revenue rose 22.1 percent to a record Rs 1,72,956 crore.

Consumer businesses, which till last year accounted for a quarter of the company's pre-tax profit, contributed 32 percent of EDITDA in Q1, the company said.

Retail business EBITDA crossed Rs 2,000 crore while telecom arm Jio posted a 45.6 percent jump in profits at Rs 891 crore.

Reliance Retail's operating revenue also jumped by 47.5 percent to Rs 38,196 crore during the quarter. Adding 229 new stores to take the total strength to 10,644, the retail business posted a 70 percent jump in pre-tax profit to Rs 2,049 crore.

RIL logo. Reuters

Retail is growing faster than every other player, expanding across geographies, formats and verticals. It now has over 23 million square feet of retail space spread across more than 6,700 towns. It crossed the milestone of 100 million registered customers and 150 million footfalls during the quarter, establishing its position as the most preferred retailer in India, the company release said.

Reliance Jio's operating revenue increased 44 percent on-year to Rs 11,679 crore in June 2019 quarter. It has piped Bharti Airtel to become the second-largest mobile operator with 32.29 crore subscribers and 27.80 percent market share in May, according to regulator TRAI's data. Jio's subscriber base stood at 33.13 crore as on 30 June, 2019.

The petrochemical business saw pre-tax profits drop 4.4 percent to Rs 7,508 crore. The operator of the world's largest oil refining complex saw pre-tax earnings from the business decline for the fifth quarter in a row. Pre-tax earnings fell 15.2 percent to Rs 4,508 crore as margins dipped. It earned $8.1 on turning every barrel of crude oil into fuel as compared to a gross refining margin (GRM) of $10.5 per barrel in April-June 2018. The GRM was also lower than $8.2 per barrel earned in the January-March quarter. An economic slowdown, trade tensions and starting of new capacities impacted downstream product prices and margins, the company said.

Commenting on the results, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited said, “Our first-quarter earnings were strong despite the weak global macroeconomic environment and challenging hydrocarbon market conditions. Our downstream businesses delivered resilient performance in an environment of slower demand growth and incremental supplies. The performance reflects the benefits of deep refining and petrochemicals integration, chain economics and feedstock flexibility."

He further said that the company continues to make major strides in its retail and digital services businesses led by a focus on growth markets with offerings in the right product segments and compelling value proposition.

"We are pleased with the robust growth both in revenues and operating income for Reliance Retail. Our digital services business continues to transform the mobility market in India while scaling newer milestones," Ambani added.

Meanwhile, Reliance Industries has entered into an agreement with Canada-based Brookfield for investment of Rs 25,215 crore in the Tower Infrastructure Trust. This is the single largest foreign investment in an Indian infrastructure vehicle.

"Reliance Industrial Investments and Holdings, a wholly-owned subsidiary of Reliance Industries has entered into an agreement with BIF IV Jarvis India, an affiliate of Brookfield Asset Management Inc. for an investment by Brookfield (along with co-investors) of Rs 25,215 crore in the units proposed to be issued by the Tower Infrastructure Trust," the company said in a regulatory filing.

Brookfield's investment is subject to stipulated government and regulatory approvals, it added.

Reliance Industrial Investments and Holdings (RIIHL) is the sponsor of the trust, which holds 51 percent share capital of Reliance Jio lnfratel Private Limited (RJIPL), an entity to which the tower assets undertaking of Reliance Jio were recently transferred.

"Proceeds from the investment by Brookfield will be used to repay certain existing financial liabilities of RJIPL and acquiring the balance 49 percent of equity share capital of RJIPL, currently held by RIL," the filing noted.

Shares of Reliance Industries Ltd (RIL) fell by 1 percent on Friday ahead of its quarterly results announcement. The scrip declined 1.01 percent to close at Rs 1,249 on the BSE. During the day, it fell by 1.48 percent to Rs 1,243.

On the NSE, shares went lower by 0.70 percent to close at Rs 1,253. In terms of the traded volume, 3.22 lakh shares were traded on the BSE and over 74 lakh units on the NSE during the day.

-With PTI inputs

(Disclosure - Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd)