Q1 Results: Petrochemicals Drive Surprise Profit Growth For Reliance Industries

Reliance Industries Ltd.’s profit grew in the June-ended quarter, helped by its petrochemicals and consumer businesses.

Even as the gross refining margin declined, its premium to the Asian benchmark Singapore GRMs rose to $4.5 per barrel from $4 earlier. The margin outperformed largely due to favourable crude sourcing, robust risk management and ramping up of new plants.

“Continuing strength in global demand for oil products and implementation of more stringent environmental norms for marine fuels augurs well for our refining business,” chairman Mukesh Ambani said in a media statement.

Growth was driven by the petrochemicals business that now contributes more to Reliance Industries’ operational profit than any of its other verticals. “Our petrochemicals business generated record Ebitda with strong volumes and an upswing in polyester chain margins.”

The Mukesh Ambani-led planning to extend its dominance outside the mainstay oil and gas business. After having disrupted the telecom industry with his upstart Reliance Jio Infocomm Ltd., India’s richest man wants to take on the likes of the country’s e-commerce companies. The telecom and retail businesses are key to Ambani’s plans as he wants them to eventually contribute nearly as much to the overall earnings of Reliance Industries as their energy and petrochemicals business.

Operating profit for the retail vertical nearly doubled over the same quarter last year. The segment's Ebit has now nearly 10 times of what it was just 10 quarters ago. “The scalability of our consumer business platforms is driving unprecedented value generation for our customers, our country and our shareholders,” he added.

Shares of Reliance Industries closed 2.9 percent higher today ahead of the results.