Reliance Industries Q2 Results Showcase Strong Earnings

Reliance Industries Limited, India’s largest private-sector company announced its Q2 results today. The Mukesh Ambani-led conglomerate showcased strong growth all around. RIL’s Quarterly consolidated net profit stood at Rupees 7,206 Crore ($ 1.1 Billion), up from the last quarter 43.1%. Additionally, its quarterly consolidated PBDIT stood at Rupees 13,551 Crore ($ 2.0 Billion), up 24.8%. The company also announced record earnings in the Petrochemicals Segment (EBIT) and record Quarterly Standalone Net Profit of Rupees 7,704 Crore ($ 1.2 Billion), up by 17.9%.

Key Highlights

The numbers showcased in the live telecast of the Q2 results by Alok Agarwal, CFO of RIL indicated to yet another strong showing by RIL. The consolidated revenue (turnover) increased by 9.6% to Rupees 81,651 crore ($ 12.3 billion). PBDIT increased by 24.8% to Rupees 13,551 crore ($ 2.0 billion) and EBIT margin at 11.3%, up by 148bps. What’s sure to ease shareholder sentiment are the numbers showcasing profit. Profit before Tax (excluding exceptional item) increased by 40.8% to Rupees 9,884 crore ($ 1.5 billion) whereas Cash Profit (excluding exceptional item) and Net Profit (excluding exceptional item) increased by 27.7% to Rupees 10,341 crore ($ 1.6 billion) and 43.1% to Rupees 7,206 crore ($ 1.1 billion), respectively.

Petrochemicals, Refining, Oil & Gas

The core of RIL’s business for the past two decades has been petrochemicals, refining and other key areas in the Oil & Gas sector. The business environment has changed dramatically over time and even in the last quarter presented some new challenges. Considering the overall business outlook of this sector, the overall scenario presented in RIL’s Q2 report does indeed look promising.

Global oil demand continues to remain firm tracking 1.3 mb/d growth in 2016. Demand growth in India has been particularly strong with 8% Y-o-Y overall growth in 1H FY17, led by gasoline (+11%), ATF (+11%), LPG (+11%) and diesel (+3%). Average utilization rates for refineries globally in 2Q FY17 were 87.8% in North America, 86.2% in Europe and 86.0% in Asia. RIL’s exports of refined products from India were at $ 4.8 billion during the 2Q FY17 as compared to $ 5.5 billion in 2Q FY16. Export volumes of refined products remained unchanged on a Y-o-Y basis at 11.1 MMT during the quarter.

New Frontiers

Reliance Industries Limited’s foray into telecommunications has been widely anticipated for some time now. The company’s 4G/LTE initiative, a subsidiary of RIL titled, ‘Reliance Jio Infocomm Limited’ officially launched services on September 1st 2016 with its ‘Welcome Offer.’  Jio has already seen over 16 million users subscribing to its services and is growing at a remarkable pace in the less than 50 days after its official launch. Jio also issued Rupees 2,000 crore of 5 year Non-Convertible Debentures (NCDs), bearing a coupon of 8.32% per annum, payable annually.

With over 2,50,000 crores invested in this ambitious new venture, Reliance is indeed banking on impressive gains from Jio for both, consumers and shareholders.

Chairman and MD on the Q2 Results

With a performance far better than the markets expected, Chairman and Managaing Director of Reliance Industries Ltd., Mukesh Ambani was understandably quite pleased with the numbers showcased in the results. Commenting on the results, he was quoted as saying, “The Company has achieved outstanding second quarter results with strong refining business performance and record petrochemicals segment earnings. Refining business sustained high profitability in a tough environment highlighting our exceptional refining assets, dynamic response to market trends and robust operations. Petrochemicals segment gained significantly from higher volumes, integration and supportive product margins. Our projects in the hydrocarbon chain are at advanced stages of mechanical completion and precommissioning activities. These projects will further strengthen our position as a leading operator in the energy and materials businesses. We are delighted and humbled by the enthusiastic adoption of Jio by India. Jio is built to empower every Indian with the power of data”.

 

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