Petchem, refining push RIL's net profit up 3.6%

Company expects Ebitda to increase in FY18 due to project completion

Mukesh Ambani-led Reliance Industries Ltd reported a 3.6% rise in its net profit in the October-December 2016 quarter on better margins in the refining and petrochemical businesses and higher other income.

The company reported a consolidated net profit of Rs 7,506 crore against Rs 7,245 crore in the same period a year ago. In the quarter July-September 2016, the company reported a 23% drop in net profit at Rs 7,206 crore on account of the high base because of exceptional income in the previous year.

The consolidated turnover for the same period was Rs 84,189 crore, 16.1% higher than the Rs 72,513 crore reported a year ago.

The company’s gross refining margin, or GRM, was reported at $10.8 per barrel, sequentially higher than the $10.1 per barrel, and lower than the $11.5 per barrel in the same quarter a year ago. 

“The refining business has delivered eight consecutive quarters of double-digit GRMs, benefitting from the global demand for transportation fuels and improved product cracks,” Mukesh Ambani, chairman and managing director, Reliance Industries, said in the company’s media statement.

Consolidated other income was higher at Rs 2,736 crore against Rs 2,440 crore in the corresponding period of the previous year. “Other income was higher primarily due to higher profit on sale of investments partially offset by lower interest income,” the company said in its media statement. Other standalone income stood Rs 3,025 crore, 33% up from Rs 2,281 crore reported in the same period a year ago.

In a Bloomberg poll, 11 analysts estimated a standalone net profit of Rs 7,842 crore and standalone revenue at Rs 65,753.6 crore.

“A GRM at $10.8 per barrel is despite the planned shutdowns in the December quarter. Cracks have been high, demand for oil, petroleum, polymer and polyster was higher in both the three-month and nine-month periods,” said V Srikanth, joint chief financial officer, Reliance Industries.

At a standalone level, RIL reported a net profit of Rs 8,022 crore and revenue of Rs 66,606 crore for the October-December period. The company met analyst expectations on net profit and revenue at the standalone level.

So far, the gross debt on its telecommunication business was at Rs 49,000 crore, in addition to the deferred liabilities of Rs 21,000 crore. The company’s consolidated net debt as of December 2016 was at more than Rs 1.18 lakh crore. 

“We are close to our peak debt, maybe a little more, but nothing dramatic,” Srikanth said.

The telecom venture, in which the company has made huge investments, will start earning after the end of its free promotional period in March. The company says it had 72.4 million subscribers on its network as of December 31 even as analysts expect the company to have a subscriber base of 100 million by the end of March.