RIL’s second quarter net profit declines 5.7% year-on-year

RIL’s second quarter net profit declines 5.7% year-on-year Mukesh Ambani-promoted Reliance Industries Ltd (RIL) on Monday reported a decline in net profit for the second quarter ended September 30, due to declining gas production and squeezed petrochemicals margins.

Though RIL enjoyed an increase of 15 per cent in net turnover to Rs 90,335 crore in July to September quarter year-on-year, yet profit after tax dropped 5.7 per cent to Rs 5,376 crore year-on-year.

EBIDTA and EBIDTA margins slipped 21.73 per cent and 8.5 per cent respectively year-on-year.

However, it is 20 per cent higher than the previous quarter, thanks to better performance of the company's refining business. Gross refining margins reached $9.5 per barrel in the three months.

It is the best figure posted by RIL in the last four quarters, but it is still lower than $10.1 it had posted for the September of last year.

The petrochemicals business of the company, which has been under pressure for a delayed time, suffered a decline of 7.9 per cent in its profit margins.

The quarterly result is in line with analysts expectations.

Following the announcement of the results, RIL CMD Mukesh Ambani said, "Despite current weakness in global economies, we continue to invest in our long-term growth projects to deliver sustainable value to all our stakeholders."

However many analysts, including Sandeep Randery of BRICS Securities, are of the view that the macro economic trends would put more pressure on refining and petrochemical margins, and would make it difficult for the company to maintain similar profitability in coming quarters.