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India’s Reliance Industries misses Q3 profit view on windfall tax, higher costs

BENGALURU (Reuters) -Reliance Industries Ltd, India’s biggest company by market valuation, reported a bigger-than-expected drop in quarterly profit on Friday, hurt by higher expenses and the government’s windfall tax on fuel exports.

The government levied the tax on exports of gasoline, diesel and aviation fuels midway last year, halting the momentum in Reliance’s oil-to-chemical (O2C) business built on cheap Russian crude and high demand for transportation fuels.

The Mukesh Ambani-led conglomerate said consolidated profit fell nearly 15% to 157.92 billion rupees ($1.95 billion) in the third quarter, with the windfall tax eating into that by 18.98 billion rupees.

It earned 185.49 billion rupees in the year-ago quarter when it benefited from strong refining margins and demand for fuel.

Analysts, on average, had expected the company’s profit to drop to 162.58 billion rupees, according to Refinitiv IBES.

Reliance’s total expenses rose nearly 16% to 2.01 trillion rupees.

That increase was more than the company’s revenue growth of 15.3%, to 2.21 trillion rupees, in the quarter.

Reliance said its downstream chemical products experienced margin pressure due to excess supply and relatively weak regional demand.

The company said it was on track to hit production of 30 million standard cubic meters of gas per day next financial year after the commissioning of its deepwater MJ gas condensate field in the Bay of Bengal KG-D6 block.

Reliance, which has diversified its businesses over the years to retail, telecom and, recently, green energy, said it approved raising up to 200 billion rupees via non-convertible debentures.

While its O2C business remained under pressure, Reliance’s telecom arm reported a 28.3% rise in third-quarter profit as it added more users and earned more per user.

Jio, India’s biggest telecom carrier by subscribers, said its average revenue per user (ARPU) – a key performance metric for telecos – rose 17.5% year-over-year to 178.2 rupees. ($1 = 81.1100 Indian rupees)

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Savio D’Souza)

Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.

Source: The Print

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