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Like earlier, the petchem and refining segments saw Reliance Industries (RIL) sail home in style in the recent September quarter. Its retail business chugged along fine, while the oil and gas exploration segment continued to languish.
The other key highlight in the quarter was the roll-out of the company’s high-stakes digital business.
The reported 23 per cent dip in RIL’s consolidated net profit was primarily due to exceptional items accounting adjustments pertaining to the oil and gas business in the year-ago period; this was due to transition to Ind-AS.
Excluding this, the company’s net profit rose a robust 43 per cent year-on-year.
Overall operating margin was up nearly 1.5 percentage points to 11.3 per cent.
The strong performance was driven by the stellar show in the petrochemicals business - robust demand across polyester and polymer products coupled with increase in operating margins saw the segment’s profit rise nearly 36 per cent.
The refining segment did well too, despite a dip in the gross refining margin to $10.1 a barrel from $10.6 in the year-ago period; higher volumes aided the segment’s nearly 10 per cent profit growth year-on-year.
The oil and gas exploration business continued to suffer both domestically and internationally, with declining output and pricing pressure resulting in an operating loss of nearly ₹500 crore.
Profit in the organised retail business though grew a robust 42 per cent year-on-year aided by new store openings and omni-commerce channel offerings.
In the few years that the digital business will take to break even, it will continue to be a drag on the consolidated financials of RIL as it was in the September quarter – consolidated profit at ₹7,206 crore was lower than the company’s standalone profit of ₹7,704 crore.
But in the long-term, this could turn out to be a key growth driver for RIL.
In the near-to-medium term, the expansion and upgrades in the refining, petchem and retail segments should aid growth, while not much is expected from the exploration business, given the pricing and regulatory challenges being faced.
Despite the massive capex incurred so far across businesses, RIL’s financial position remains robust with consolidated debt-to-equity ratio at a reasonable 0.74 times and interest service coverage ratio in excess of 10 times.
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