Reliance Industries Shares Fall 1.4% After Reporting Record Profit in Q3

Reliance Industries Ltd (RIL) shares fell 1.4% in early trade on Monday, i.e. 20 January, after the company reported its highest-ever quarterly consolidated net profit of Rs 11,640 crore for the three months ended December (Q3), up 13.5% year-on-year and 3.4% sequentially.

At 10:03 am, shares of RIL were trading at Rs 1,562.05 apiece, down 1.2%, after hitting the day’s low of Rs 1,559. The RIL stock has jumped by a healthy 26% in the last one year compared with a nearly 13% rise in the Nifty 50 index.

RIL posted revenue of Rs 168,858 crore in the December quarter, down 1.4% year-on-year, mainly because of a 10.6% decline in the O2C (oils-to-chemicals) business revenue on the back of lower product price realization and a 6.6% fall in Brent crude price. RIL’s O2C division includes refining, fuels marketing and petrochemicals businesses.

Gross refining margin (GRM) for the December quarter came in at $9.2 per barrel against $8.8 a barrel a year ago and $9.4 per barrel in the previous quarter.

“The third-quarter results for our energy business reflects the weak global economic environment and volatility in energy markets. Within our O2C chain, downstream petrochemicals profitability was impacted by weak margins across products with subdued demand in well-supplied markets. Refining segment performance improved in a difficult operating environment given our continuous focus on cost positions, high operating rates and product placement,” said RIL’s chairman and managing director Mukesh Ambani.

The company’s telecom business, Reliance Jio, reported a massive 36.4% sequential growth in profit for the December quarter at Rs 1,350 crore. The revenue for the business jumped 6.4% to Rs 13,968 crore compared with the previous quarter.

Reliance Retail supported overall Q3 numbers, with the revenue from the segment growing 27.4% year-on-year and 10% sequentially to Rs 45,327 crore. The segment’s EBIT (earnings before interest and tax) grew 58% year-on-year (up 17.4% sequentially) to Rs 2,389 crore.

After the earnings, Morgan Stanley maintained its ‘overweight’ stance on RIL, with a target price of Rs 1,753 per share, saying that earnings were 6% above its estimate mainly due to lower tax rates.

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