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Companies

Reliance Industries quarterly profit beats estimates on telecom, retail boom

Reliance Jio posts 65% jump in net income

Wireless services and retail businesses are key to Reliance Industries over the next decade.   © Reuters

MUMBAI (NewsRise) -- Billionaire Mukesh Ambani's Reliance Industries reported a better-than-expected 9.8% increase in quarterly profit as surging revenue from its wireless and retail ventures offset weak margins at the core energy and gas business.

The wireless services and retail businesses are key to the oil-to-telecom giant over the next decade as a boom in consumer demand sweeps the world's second-most populous nation. Despite the volatility in global oil prices, the group's energy business, too, has been growing at a robust pace aided by the surging demand for auto fuels in India, which is set to become the world's largest car market by 2021.

Reliance's consolidated net profit for the fourth quarter ended in March stood at 103.6 billion rupees ($1.5 billion), beating analysts' expectations of 97.96 billion rupees, according to Bloomberg data. Revenue surged more than 19% to 1.54 trillion rupees, the company said in a statement on Thursday.

On a standalone basis, the profit declined 1.6% to 85.56 billion rupees, weighed by lower crude prices. The standalone business includes the company's core oil and gas business that accounts for nearly 90% of its revenue.

The Mumbai-based company reported a record net profit for the year amid "heightened volatility" in the energy markets, Ambani, the chairman and managing director of Reliance, said in the statement.

Wireless venture Reliance Jio Infocomm, which started commercial operations in April 2017 after months of free services, reported a 65% jump in net profit to 8.40 billion rupees, aided by surging data consumption in the fastest-growing telecom market in the world. Operating revenue jumped 56% to 111.06 billion rupees.

HDFC Securities had expected the telecom operator to report a net profit of 10.70 billion rupees in the quarter. The company, which has a 30% revenue share of India's telecom market, is expanding its footprint at a searing pace on the back of cut-rate tariffs, raising formidable competition to rivals Bharti Airtel and Vodafone Idea.

Jio added 27 million users on a net basis in the last quarter, taking its total customer base to almost 307 million at the end of March. The company aims to have 400 million users by the end of March 2021 with a 50% revenue share of the three trillion-rupee Indian mobile phone market.

Operating profit at the organized retail business, including groceries and apparels, jumped 81% to 17.2 billion rupees, Reliance said. According to a report by Moneycontrol, the company is in talks to buy British toy store chain Hamleys. Reliance is aggressively pursuing the deal, the report said citing sources it didn't identify. The company declined to comment on the news.

Reliance, which runs the world's biggest oil-refinery complex, said its operating earnings at the petrochemicals business jumped 24% aided by rising sales volumes and prices.

However, gross refining margin -- the difference between the total value of petroleum products and the price of crude oil -- fell to $8.2 per barrel from $8.8 per barrel in the previous quarter, and $11 a year earlier. The refining margins are in line with analysts' expectation, and beat the Singapore benchmark at $5 per barrel.

Ahead of the earnings announcement, Reliance shares ended 2.8% higher in Mumbai trading, while the benchmark BSE Sensex lost 0.3%.

--Dhanya Ann Thoppil

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