Reliance Industries (RIL) — India’s largest company by turnover and exports — is also set to become the country’s single-largest profitable company in FY10, thanks to its second refinery at Jamnagar and KG basin gas, when it publishes its results on Friday. On a consolidated basis, however, the ONGC Group, which includes ONGC and its subsidiaries Mangalore Refinery and ONGC Videsh, is likely to retain its leadership.
RIL, which reported a net profit of Rs 1,1526 crore for the first nine months of FY10 — around Rs 1,465 crore lower than ONGC’s — is expected to surpass the state-owned oil major’s last quarter standalone profits by over Rs 1,500 crore, according to various analyst estimates. Both companies report their quarterly numbers on a standalone basis while consolidating the numbers of subsidiaries in their annual results. ONGC Group’s consolidated net profit for FY10 is likely to remain above Rs 20,000 crore as in the previous two years.
The refining as well as E&P businesses would be the key drivers of profit growth, said Deepak Pareek, an analyst with Angel Broking. “RIL is likely to report strong performance during the quarter, primarily on account of increase in gas production and better refining margins,” he mentioned. In the past, only in FY08 had RIL’s profits surpassed those of ONGC’s, on account of extraordinary income of Rs 4,733 crore on sale of Reliance Petroleum shares. Excluding the impact of this extraordinary income, profits from operations were below that of ONGC’s.
However, now, for the first time, RIL’s profits from normal business activities, that are considered sustainable in future, are set to cross Rs 16,700 crore on a standalone basis for FY10 — the largest for any listed Indian company. ONGC, which was the single-largest profit-making company so far, is expected to close FY10 with a net profit of around Rs 16,200 crore.
In the current year, RIL’s subsidiary raised over Rs 9,300 crore through sale of treasury shares, which will add to its consolidated numbers. Although extraordinary, these profits could take RIL’s consolidated profit to a historical high hitherto unseen in Corporate India.
RIL, which is also India’s largest company by market capitalisation with a 13.2% weightage in the Sensex, witnessed a strong 46% increase in volumes in the first nine months of FY10, as its second refinery gradually reached full capacity. Higher average crude oil price — at around $78 per barrel during the March 2010 quarter as against $45 in the year ago period — is also set to boost revenues.
Fuelled by both volume and value growth, the company is expected to double its revenues in the last quarter of the year, with gross refining margins recovering from $5.9 in December 2009 quarter to $8-8.5 per barrel in March 2010 quarter. The company had recorded a refining margin of $9.6 per barrel in the March 2009 quarter. While all its segments are expected to contribute to the growth drive, the key impetus will come from the E&P business.
“With gas volumes averaging above 60 MMSCMD during the March 2010 quarter, the E&P business would show the biggest profit growth against the year ago period,” mentioned Sandeep Randery, senior research analyst with BRICS Securities.
Independent advisor SP Tulsian concurs. He says that the firm is expected to report a 257% jump in its profits from the E&P segment for the March 2010 quarter on a Y-o-Y basis at Rs 1,690 crore, while the petrochemicals and refining businesses may post a modest growth of 24% and 12%, respectively.
RIL, which reported a net profit of Rs 1,1526 crore for the first nine months of FY10 — around Rs 1,465 crore lower than ONGC’s — is expected to surpass the state-owned oil major’s last quarter standalone profits by over Rs 1,500 crore, according to various analyst estimates. Both companies report their quarterly numbers on a standalone basis while consolidating the numbers of subsidiaries in their annual results. ONGC Group’s consolidated net profit for FY10 is likely to remain above Rs 20,000 crore as in the previous two years.
The refining as well as E&P businesses would be the key drivers of profit growth, said Deepak Pareek, an analyst with Angel Broking. “RIL is likely to report strong performance during the quarter, primarily on account of increase in gas production and better refining margins,” he mentioned. In the past, only in FY08 had RIL’s profits surpassed those of ONGC’s, on account of extraordinary income of Rs 4,733 crore on sale of Reliance Petroleum shares. Excluding the impact of this extraordinary income, profits from operations were below that of ONGC’s.
However, now, for the first time, RIL’s profits from normal business activities, that are considered sustainable in future, are set to cross Rs 16,700 crore on a standalone basis for FY10 — the largest for any listed Indian company. ONGC, which was the single-largest profit-making company so far, is expected to close FY10 with a net profit of around Rs 16,200 crore.
In the current year, RIL’s subsidiary raised over Rs 9,300 crore through sale of treasury shares, which will add to its consolidated numbers. Although extraordinary, these profits could take RIL’s consolidated profit to a historical high hitherto unseen in Corporate India.
RIL, which is also India’s largest company by market capitalisation with a 13.2% weightage in the Sensex, witnessed a strong 46% increase in volumes in the first nine months of FY10, as its second refinery gradually reached full capacity. Higher average crude oil price — at around $78 per barrel during the March 2010 quarter as against $45 in the year ago period — is also set to boost revenues.
Fuelled by both volume and value growth, the company is expected to double its revenues in the last quarter of the year, with gross refining margins recovering from $5.9 in December 2009 quarter to $8-8.5 per barrel in March 2010 quarter. The company had recorded a refining margin of $9.6 per barrel in the March 2009 quarter. While all its segments are expected to contribute to the growth drive, the key impetus will come from the E&P business.
“With gas volumes averaging above 60 MMSCMD during the March 2010 quarter, the E&P business would show the biggest profit growth against the year ago period,” mentioned Sandeep Randery, senior research analyst with BRICS Securities.
Independent advisor SP Tulsian concurs. He says that the firm is expected to report a 257% jump in its profits from the E&P segment for the March 2010 quarter on a Y-o-Y basis at Rs 1,690 crore, while the petrochemicals and refining businesses may post a modest growth of 24% and 12%, respectively.
Source: Econmic times
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