Reliance Industries Ltd (RIL) today posted its highest ever quarterly net profit, but failed to meet the street's expectation on lower than expected refining margins and flat natural gas production from its flagship Krishna-Godavari basin. Its net profit for the quarter ended March 2011, rose 14 per cent to Rs 5,376 crore against Rs 4,710 crore in the corresponding previous quarter.
“Global economic growth, emerging market demand and market tightness led to recovery in refining margins and record petrochemical earnings,” said Mukesh Ambani, chairman and managing director.
During the quarter, RIL recorded a gross refining margin, (earning on turning every barrel of crude oil into fuel) of $9.20 per barrel, up from $7.50 a barrel a year ago and $9 in the previous quarter. RIL operates the world's biggest refining complex in western India. “The market was expecting a better refining margin. As RIL buys heavy grades of crude oil and processes the same into products, including gasoline and diesel, a wider difference between heavy and light grades of crude helps it post better refining margins,” said a Mumbai-based analyst.
Though revenues from RIL's gas business dropped five per cent to Rs 4,104 crore for the entire financial year on account of lower production from D6, compared to Rs 4,318 crore in 2009-10, the company announced a rich gas and condensate discovery in the first well drilled in the block CY-PR-DWN-2001/3(CYPR-D6) in deep water Cauvery-Palar basin. The block was awarded to RIL under the bidding round of NELP-III.
RIL currently holds 100 per cent participating interest in this block. This is one of the 23 exploration blocks where BP Exploration (Alpha) limited would have a 30 per cent participating interest subject to the government approval.
The RIL stock closed 1.39 per cent up at Rs 1,039.95 on the Bombay Stock Exchange. In intra-day session, the stock rose by 1.78 per cent to a high of Rs 1,044. “During the day the stock went up in anticipation of good quarterly performance. We, however, see the company's stock range bound at Rs 980-1,050. The stock can break upward only if the company comes up with better estimates for its natural gas production,” said Kamlesh Kotak, vice-president, Research, Asian Market Securities.
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For the full year, RIL net profit was up 25 per cent to Rs 20,286 crore while sales increased 29 per cent to Rs 248,170 crore. During the year, revenue for the petrochemical segment increased by 14 per cent to Rs 63,155 crore from Rs 55,251 crore. Of this, higher prices contributed 13 per cent of growth while volumes contributed 1 per cent, the company said in a press statement.
The company also announced a dividend of Rs 8 per fully-paid up equity share of Rs 10 each aggregating Rs 2,772 crore.