Reliance Q4 result: Experts see RIL in $100 bn club; give thumbs up to Jio

How is Reliance Jio managing so many freebies? That is questionable, says Sanjiv Bhasin, IIFL

Oil-to-telecom conglomerate Reliance Industries today reported its highest quarterly net profit of Rs 94.35 billion on record earnings from petrochemical and retail business and rise in profitability of its upstart telecom unit, Jio. Consolidated net profit of Rs 94.35 billion, or Rs 15.9 per share, in January-March was 17.3 per cent higher than Rs 80.46 billion, or Rs 13.6 a share, in the same quarter of the last fiscal, the company said in a statement. While its core petrochemical business posted record quarterly pre-tax profits, earnings from the oil refining business dipped on squeeze in margins. However, the surprise package was retail which clocked over 200 per cent rise in pre-tax profit.

Helped by rise in earnings across businesses, Reliance Industries posted a record net profit of Rs 360.75 billion in the fiscal year ending March 31, 2018, up 20.6 per cent over Rs 29,901 crore net profit of 2016-17 fiscal. It had highest ever PBDIT (profit before depreciation interest and taxes) of Rs 741.84 billion.

Jio, which with 186.6 million subscribers is the world's largest and fastest growing mobile data network, saw profits rise to Rs 5.10 billion, up 1.2 per cent over third quarter earnings. Though Jio started operations in September 2016 with free voice and data offering, 2017-18 was first full year of its financial reporting.

For the 2017-18 fiscal - the first full year of commercial operation - it had a net profit of Rs 7.23 billion.il-to-telecom conglomerate Reliance Industries today reported its highest quarterly net profit of Rs 94.35 billion on record earnings from petrochemical and retail business and rise in profitability of its upstart telecom unit, Jio. Consolidated net profit of Rs 94.35 billion, or Rs 15.9 per share, in January-March was 17.3 per cent higher than Rs 80.46 billion, or Rs 13.6 a share, in the same quarter of the last fiscal, the company said in a statement.

Know what experts have to say about Reliance Q4 & Jio results:

Sushil Choksey, Indus Equity Advisors

Petrochem margin looks amazing. By 2019, numbers of the core business of petrochem and refining will be matching. There's a possibility, petrochemical will be higher than refining and marketing business. Jio number looks stable, but if you are looking at long-term investment point-of-view, the core business of Reliance is doing wonderfully well. Looks like they'll be able to throw in enough cash for Jio expansion. 

Sanjiv Bhasin, IIFL

How is Reliance Jio managing so many freebies? That is questionable.  But robust growth of 134 per cent in retail business and continuing growth momentum has turned positive, and over a period of time it will sustain given, cash infusion is coming from the other businesses. 

Reliance deserves to be in the $100 billion club. It may not happen now, but it is definitely on board. This quarter maybe a slightly sluggish one. But in the next three months, Reliance will be in the $100 billion club. If they maintain 134 as APRU, then that means they are really showing a lot of strength. 

Vikas Halan, Moody's Investors Service

As oil prices increase, refining margins do come down. That co-relation we have seen over the past few years. Gross refining margin (GRM) dipped to $11 from $11.6 reported in the December quarter. We had expected Q4 FY18 GRM to come in at $11.3-11.6.

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Despite low-cost mobile services, Jio posted the highest average revenue per user in the industry at Rs 137.1 per month during the reported quarter. Sunil Bharti Mittal-led Airtel reported an average revenue per user (ARPU) of Rs 116 for the quarter, down by 26.7 per cent from Rs 158 it had registered a year ago.

In the next few quarters, the competition is going to be intense for both Reliance and Bharti.

Abhijit, Sharekhan

GRMs are slightly below our expectations. We expected it to be around 11.4.Good traction from retail. Rather than looking at Reliance on quarter to quarter basis, it should be seen as a long-term India story of diversification. We are very close to the capex cycle for their petrochem. There will be a sharp jump in profitability trend.