Reliance reaps record profit from consumer-facing growth

 Indian oil-to-telecoms conglomerate Reliance Industries said strong growth in its consumer-facing businesses lifted second quarter net profit by 18.3% year-on-year to a record total.

Consolidated net profit rose to 112.62 billion Indian rupees ($ 1.58 billion) in the three months ended Sept. 30, the country’s largest company by market value said on Friday.

Analysts on average had expected a profit of 111.71 billion rupees, according to Refinitiv data.

“The company has reported a record net profit for the quarter,” Reliance’s billionaire Chairman Mukesh Ambani said, adding that the results also reflect the rapid scale-up of its consumer businesses.

Its telecom business, Jio, posted operating revenue of 123.54 billion rupees, while revenue at its organised retail business jumped to 412.02 billion rupees.

The consumer business rose to represent 33% of Reliance’s overall operating profit, almost on par with its refining arm for the first time, Joint CFO V Srikanth told a press briefing, underscoring Ambani’s shift towards retail and technology.

Meanwhile, gross refining margin, profit earned on each barrel of crude oil processed, was reported at $ 9.4 per barrel. This is higher than the previous quarter, but a whisker below $ 9.5 per barrel posted in the same quarter of last year.

Reliance runs a 1.4-million barrels per day (bpd) refining complex in western India.

As new marine fuel regulations are set to kick in next year, more vessels are opting for diesel, pushing up prices of the fuel and benefiting refiners.

Reliance has invested billions of dollars in the last few years to boost its income from consumer-facing businesses as it looks to bring it on par with traditional refining and petrochemicals business.

“Our investment cycle is now coming to an end with all the projects in our energy business close to completion and the major investments in our network for our digital business also being made,” CFO Alok Agarwal said separately.

Jio’s net profit jumped 45.4% to 9.9 billion rupees because it added some 24 million customers during the quarter.

Its retail operations continued on a strong growth trajectory and posted an earnings before interest and tax (EBIT) of 20.35 billion rupees, the company said.

Reliance has not decided what its effective tax rate will be after India’s corporate tax cut last month, Srikanth said, adding it is not seeing too many “headwinds” in retail, despite Indian economic growth being at around six-year lows.