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(Bloomberg) — Reliance Industries Ltd.’s quarterly profit beat estimates as the billionaire Mukesh Ambani-led conglomerate benefited from a massive one-time gain from divesting its stake in India’s biggest paints maker.
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Net income rose 78% to 269.9 billion rupees ($3.1 billion) in the three months ended June 30, according to an exchange filing Friday. That surpassed the 200.59 billion rupees average of analyst estimates compiled by Bloomberg.
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Other income at the refining-to-retail group surged almost 280% to 151.2 billion rupees, with more than half coming from an “investment sale,” the filing said. Reliance sold about 3.7% stake in Asian Paints Ltd. for $900 million on June 12 and completed exited its holding a few days later, raking in another $223 million.
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India’s largest company by market value reported a 5.5% increase in revenue to 2.49 trillion rupees, compared with the year-ago quarter. Total costs advanced 4.6% to 2.27 trillion rupees, the filing said.
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Reliance plans to operationalize its entire new energy ecosystem in the next four to six quarters, it said in a media statement, as Ambani’s strategic diversification in 2021 beyond fossil fuel-linked businesses begins to fructify.
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Key Insights
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- The big financial boost from the sale of Asian Paints’s stake helped paper over slight weakness in the oil-to-chemicals business whose revenue slipped 1.3%. The company had partially shut units at the 663,000 barrels-a-day Jamnagar refinery in April for maintenance work.
- Reliance, which is India’s top buyer of Russian crude, may also face challenges going ahead after the European Union tightened sanctions on Russia on Friday, including measures that will curb fuel supplies made using Russian petroleum.
- Reliance is a large exporter of fuels including diesel to Europe, as per data analytics firm Kpler.
- Goldman Sachs, in a note ahead of the earnings, penciled in the possibility of a 20% on-year growth in operating profit in the July-September quarter owing to the return of full refining capacity and lower crude prices, among others.
- Reliance “is confident of doubling Ebitda across the group by the end of golden decade,” it said in a post-earnings presentation. Ambani had said in July 2018 that Reliance was entering a so-called golden decade.
- Reliance’s retail and telecommunications businesses again posted robust growth in revenue, with subscription gains at the wireless unit making a strong case for its listing.
- Reliance is consolidating all its consumer goods brands into a new unit as it readies for an initial public offering of its retail business.
- Unit Reliance Retail announced a deal Friday to acquire home appliances maker Kelvinator, in the latest sign of aggressive expansion in the consumer segment.
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Market Reaction
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- Reliance’s shares have surged 17.7% in the June quarter outpacing the 8% rise in the benchmark BSE Sensex index. The stock has jumped 21.4% this year
- Earnings were announced after the close of market hours
- Read More: Reliance’s $40 Billion Gain Fuels Best Run Over Nifty Since 2020
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Get More
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- Digital services revenue 419.5 billion rupees, +18% y/y
- Jio subscriber base 498.1 million subscribers, +2% q/q, while average-revenue-per-user also rose 1.3% to 208.8 rupees
- Retail revenue was at 841.7 billion rupees, +11% y/y
- Total debt, as of June 30, fell 2.6% q/q to 3.38 trillion rupees while cash and cash equivalents slipped 4.2% to 2.21 trillion rupees
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—With assistance from Satviki Sanjay and Rajesh Kumar Singh.
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(Updates with details throughout.)
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English (US)