Continued growth in its retail and telecom business helped Reliance Industries Ltd (RIL), India’s most valuable company, offset the weakness in its petrochemicals business to post an 18.3% year-on-year rise in its consolidated net profit for the quarter ended September 30 to ₹11,262 crore.

Oil-to-yarn and retail-to-telecom conglomerate RIL’s revenue for the same period stood at ₹1.63 lakh crore, a growth of 4.8% over the year-ago period.

In anticipation of RIL’s strong earnings for the July-September 2019 quarter, the company’s share prices gained ground on the bourses on Friday and the company became the first Indian enterprise to cross ₹9 lakh crore in market capitalisation during Friday’s trade on the BSE. RIL’s share price finally closed at ₹1,415.30 per share on the BSE, up 1.37% over its previous close. The final market value at which RIL ended Friday’s trade was marginally lower at ₹8.97 lakh crore. The bourse’s benchmark index, S&P BSE Sensex ended at 39,298.38 points, up 0.63%.

RIL’s EBITDA (earnings before interest, tax, depreciation and amortisation) for the second quarter of FY2020 stood at ₹25,820 crore, up 15.5% year-on-year. On a sequential basis, RIL’s turnover was down 5.3%, while net profit rose 11.5%.

Reliance Jio Infocomm, which has emerged as India’s largest telco by subscriber base, reported continued growth in the July-September quarter, posting operating revenue of ₹12,354 crore, up 33.7% and net profit of ₹990 crore, up 45.4% year-on-year. The telco, which has recently started charging customer’s outgoing voice calls to recover the interconnect usage charges it needs to pay to competitors on whose networks outbound calls from Jio land, added 24 million in the preceding quarter, taking its total subscription base up to 355.2 million users. Average revenue per user (ARPU), however, continued to remain muted and came in at ₹120, down from the ₹122 reported in the preceding quarter.

RIL’s crude refining and marketing business reported a turnover of ₹97,229 crore, down 1.6% year-on-year and segment EBIT (earnings before interest and tax) of ₹4,957 crore, down 6.9%. The gross refining margin (GRM) – difference between the value of petroleum products sold and the cost of refining crude – reported by the Mukesh Ambani-led company came in at $9.4 per barrel. The GRM remained flat compared to the year-ago period ($9.5) and was at a 31% premium to the benchmark Singapore GRM. According to RIL’s earnings statement, operating profit from the refining business for the quarter fell due to narrow light-heavy crude differentials and marginally lower GRMs. “Additionally, tighter crude markets for heavy crudes resulted in higher costs.”

Along expected lines, the petrochemicals business proved to be a weak spot for the company. Revenue from the business fell 11.9% year-on-year to ₹38,538 crore. EBIT from the business also improved/declined 6.4% over the year earlier to ₹7,602 crore. The weakness in the petrochemicals business was mainly attributable to weaker petrochemical product margins due to weak demand outlook and excess capacity around the world.

RIL’s retail business, through which it sells everything from grocery to apparel and consumer durables, reported strong earnings. Revenue from the business rose 27% year-on-year to ₹41,202 crore, surpassing topline contribution from the petrochemicals vertical. Profit from the retail operations stood at ₹2,035 crore, a staggering growth of close to 64% over the same quarter last fiscal.

“The company has reported record net profit for the quarter. These excellent results reflect benefits of our integrated Oil to Chemicals (O2C) value chain and the rapid scale-up of our consumer businesses,” RIL’s chairman Mukesh Ambani said in a statement. “Continuing growth trends in our retail business is heartening. Guided by our obsession to provide the best value for our customers, Reliance Retail delivered robust performance with record quarterly revenues and EBITDA.”

At RIL’s last annual general meeting in August, Ambani had articulated his plan to deleverage the company’s balance sheet, which has assumed significant debt over the last few years to execute a capital expenditure plan across businesses. However, the September quarter earnings didn’t offer a glimpse of this plan as the company’s outstanding debt continued to rise. RIL’s outstandingi debt as on September 30, 2019 was ₹2.91 lakh crore, up from ₹2.87 lakh crore as on March 31, 2019. The company’s cash and cash equivalents rose during this period to ₹1.34 lakh crore, up from ₹1.33 lakh crore in the preceding quarter.

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