Q2 Results: Reliance Industries’ Profit Rises Most In 15 Quarters As Refining Margin Rebound
Net profit rose 7.4 percent sequentially to Rs 9,702 crore.
Reliance Industries Ltd.’s standalone quarterly profit met estimates, aided by a sharp recovery in refining margins, higher output from its petrochemicals business and a lower tax rate.
Net profit rose 7.4 percent sequentially to Rs 9,702 crore in the quarter ended September, according to the company’s stock exchange filing. Analyst estimates compiled by BloombergQuint had pegged the metric at Rs 9,669 crore.
This is the highest profit growth for Reliance Industries in 15 quarters.
The numbers were largely in-line on the revenue and profitability fronts. But operational performance was a miss, mainly as the refining margin was slightly lower than estimated.
- Revenue fell 1.3 percent quarter-on-quarter to Rs 87,137 crore.
- Operating profit rose 0.2 percent to Rs 13,666 crore compared with an estimate of Rs 14,858 crore. Though marginal, this was the first rise in four quarters.
- Operating margin widened 20 basis points to 15.7 percent. Analysts had expected a 130 basis point rise.
- Gross refining margin—what RIL earns for refining one barrel of crude oil—rose to $9.4 per barrel, from $8.1 per barrel in the previous quarter.
The rise in global oil prices during the quarter has led to a surge in cracks—difference between crude price and wholesale petroleum price—across products. That’s helped revive Reliance Industries’ refining margins that had been falling for the past seven quarters.
Singapore gross refining margins, the Asian benchmark, averaged around $6.5 per barrel in the quarter ended September—the highest in six quarters and nearly double of what they were last quarter. A higher gross refining margin means the company would be able earn more for converting every barrel of crude oil into fuel.
The quarter’s earnings also benefited from a lower tax outgo after the government reduced both the headline rate of corporate tax (from 30 percent to 22 percent) and the Minimum Alternate Tax rate (18.5 percent to 15 percent). In the first quarter RIL standalone paid an effective MAT rate of 25 percent (including surcharge and cess), that now stands reduced to 21 percent.
Shares of Reliance Industries closed 1.37 percent higher compared with the benchmark BSE Sensex that ended trade 0.63 percent up. The earnings were announced after the close of trade.