Reliance Industries shares move lower in choppy trade on Q2 earnings

The shares of Reliance Industries Ltd fell as much as 0.9 percent in choppy trade on Tuesday after the company reported a decline of 23.9 percent in the net profit for the September quarter.

The stock of the conglomerate however rose 0.7 percent earlier in the session. The shares were trading 0.8 percent lower at Rs 2,460 on BSE at 11:38 am.

The company reported its net profit at Rs 13,656 crore for the three-month period, down 23.9 percent sequentially owing to pressure in its oil-to-chemical (O2C) business on Friday.  The revenue from the company's oil-to-chemical unit came in at Rs 1.6 lakh crore for the September quarter, as against Rs 1.61 lakh crore for the April-June period.

"The O2C business and gas included is always the elephant in the room, because 63 percent of consolidated net profit, even in this quarter came from these businesses," Jal Irani of Nuvama Group told CNBC-TV18. Irani said that the $4 windfall tax impacted things. "Windfall tax to a similar extent of about $4 continues into this quarter. So that is, needless to say, going to be a dampener in the near term," he said.

The majority-owned subsidiary of Reliance Industries, Reliance Jio's net profit increased 4.2 percent to Rs 4,518 crore for the period under review.

"I would say that on the mobile business front, this quarter was fairly stable," said Balaji Subramanian of IIFL Securities. "And as Reliance had already announced, they are planning to invest about Rs 2 lakh crore in the next few years on 5G... I would think that the case for a tariff hike probably arises post these results where we are seeing that, in the absence of tariff hikes, the revenue has been quite stable, considering the fact that investments are going to be stepped up from here on."

The telecommunications company's margin and revenue grew for the third consecutive quarter. Jio's average revenue per user or ARPU for the September quarter stood at Rs 177.2 against Rs 175 in the previous quarter.