By VarunVyas Hebbalalu and Sethuraman N R
NEW DELHI/BENGALURU (Reuters) -India’s Reliance Industries reported a drop in second-quarter profit on Monday, as its oil-to-chemicals (O2C) business grappled with lower margins, more than offsetting a boost from price increases for the company’s mobile services.
The Mukesh Ambani-led conglomerate posted a consolidated profit of 165.63 billion rupees ($1.97 billion) in the quarter ended Sept. 30, down 4.8% from a year earlier.
That was in line with the 165.61 billion rupees expected by analysts, according to LSEG data.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the O2C segment fell 23.7% from a year earlier.
“Unfavourable demand-supply balance led to sharp ~50% decline in transportation fuel cracks and continued weakness in downstream chemical deltas,” Reliance said in a statement.
Asian refiners’ margins have fallen around 31% this year as an increase in refining output has led to an oversupply of petroleum products, crimping demand.
While Reliance, India’s most valuable company, has diversified into other businesses such as retail, telecom and green energy, its O2C operation accounts for two-thirds of its total revenue.
The Jamnagar complex, which houses two refining plants with a combined capacity of about 1.4 million barrels per day, is at the core of its O2C operations.
The company’s telecom arm, Reliance Jio Infocomm, reported a 23% jump in profit, helped by an increase in mobile plan rates.
Jio’s subscriber count, however, fell 2.2% sequentially, which the company attributed to a tariff hike, but expected churn to taper going forward.
Meanwhile, the conglomerate’s retail unit saw revenue from operations falling 3.5% from a year ago, due to weak demand for fashion and lifestyle products.
The overall retail demand has picked up in the first two weeks of October and is expected to be strong going into the festive season, the company said in an analyst call.
($1 = 84.0300 Indian rupees)
(Reporting by Sethuraman NR in New Delhi, Varun Hebbalalu and Aleef Jahan in Bengaluru; Editing by Varun H K and Anil D’Silva)
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