NEW DELHI/BENGALURU (Reuters) -India’s Reliance Industries reported a drop in second-quarter profit on Monday, hurt by weak fuel refining margins and lower demand for petrochemicals.
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.
This was in line with the 165.61 billion rupees expected by analysts, according to LSEG data.
Revenue from Reliance’s oil-to-chemicals (O2C) operations rose about 5% year-on-year to 1.56 trillion rupees, compared to an 18% growth in the first quarter.
Asian refiners’ margins have fallen around 31% so far this year due to lower demand for petroleum products and an increase in companies’ refining output which boosted supplies of petrol and diesel.
“Unfavourable demand-supply balance led to sharp ~50% decline in transportation fuel cracks and continued weakness in downstream chemical deltas,” Reliance, India’s most valuable company, said in a statement.
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 Reliance’s O2C operations, making it a key profit driver.
While the company has diversified into other businesses such as retail, telecom and green energy, its O2C operations comprises two-thirds of total revenue.
The company’s telecom arm, Reliance Jio Infocomm, reported a 23% jump in profit as its first tariff hike in more than two years boosted the average revenue per user – a key performance metric for telecom firms – by 7.4% to 195.1 rupees.
However, Jio’s subscriber count fell 2.2% sequentially to 478.8 million, with analysts saying users switched to cheaper carriers due to the tariff hike.
The firm’s revenue from operations rose 14.5% to 283.38 billion rupees.
($1 = 84.0300 Indian rupees)
(Reporting by Sethuraman NR in New Delhi, Varun Hebbalalu and Aleef Jahan in Bengaluru; Editing by Varun H K)
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