Reliance profit beats estimate despite year-on-year decline

Indian conglomerate Reliance Industries reported quarterly profit above analyst expectations, helped by steady performance in its oil-to-chemicals business and consumer-facing divisions.

The company said net profit attributable to owners was 209.46 billion rupees, or $2.17 billion, for the April-June quarter. That was down more than 22 percent from the same period a year earlier, but above the average analyst estimate of 198.23 billion rupees.

The profit fall had been expected because the same quarter last year was sharply boosted by a one-off gain from the sale of a key investment.

Revenue from operations rose by more than 25 percent year-on-year to 3.11 trillion rupees. The company also reported a nearly 31 percent rise in the cost of materials consumed.

Reliance, led by Mukesh Ambani, is India’s most valuable company by market capitalisation. It has expanded into telecoms and green energy over the last decade, but still depends on its traditional oil business for profits. The company owns and operates the world’s largest refinery complex in Gujarat.

Reliance said its oil business had faced headwinds from the Mideast conflict, but said it managed them through crude basket diversification, efficient product placement in deficit markets and favourable ethane cracking economics. Ambani said the oil-to-chemicals unit delivered a strong performance, helped by record refining margins, despite a difficult global energy market and disrupted supply chains.

The company’s consumer-facing businesses also supported the quarter. Its telecoms arm, which is set for an initial public offering later this year, reported a 3.3 percent year-on-year rise in average revenue per user. Reliance said the increase reflected a better subscriber mix and came despite discount schemes for fixed broadband customers.

The retail unit posted a 7.4 percent year-on-year rise in gross revenue, supported by growth in grocery, fashion and consumer electronics. Margins fell slightly as the conglomerate invested in infrastructure for its quick commerce push.

Reliance Industries shares have fallen more than 15 percent this year, underperforming the benchmark Nifty index.