RIL surprises D-Street with 16% jump in Q3 profit

India’s most valuable company, Reliance Industries (RIL), bettered market expectations to clock its first quarterly profit growth in over a year, thanks to fresh outflow from its gas fields that offset shrinking refining margins. 

RIL’s net profit for the three months to December 31, 2009, stood at Rs 4,008 crore, up 15.8% year-on-year. “Volumes from the new refinery, gas sales and improved petrochem margins pushed up profits,” company CFO Alok Agarwal said at a press conference on Friday. 

RIL expects refining margin, which has halved to $5.9 per barrel, to improve in the coming quarters. “If we see growth in Asian countries, we will see margins improving across our businesses,” Mr Agarwal said. 

Gross refining margin for the nine months ended December 31 was at $6.2 per barrel, compared with $12.9 per barrel during the same period the previous year. 

Sandeep Randery, analyst at Bric Securities, said the results were more or less in line with expectation. “The outlook for the remaining quarters is good, as both its refineries are working at full capacities with stable margins and output from gas fields is rising,” he said. 

The company’s turnover rose 92.7% to Rs 58,848 crore. Net profit for the nine-month period ended December 31, 2009, however, declined 1.3% to Rs 11,682 crore. 

“Refining margins will improve from the third-quarter levels led by improved supply-demand balance globally. Gas volumes will also improve to 80 million cubic metres per day,” said Sanjeev Prasad, analyst at Kotak Securities. Reliance stock closed 0.06% lower at Rs 1,053 on Friday in a weak Mumbai market. 

The company promoted by Mukesh Ambani had recently raised Rs 9,300 crore from the sale of treasury stock. “We are positioning for a bigger pace and the money raised will be used for capital expenditure and financial investment,” said Mr Agarwal. 

RIL is exploring the possibility of buying bankrupt petrochemicals maker LyondellBasell for around $13.5 billion.

Source: Economic Times

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