RIL's GDR on the London Stock Exchange rose 0.75 per cent to $29.61, after coming off a high of $29.84.
SP Tulsian, an independent analyst, said the RIL stock would react negatively on Tuesday, despite the fact that the contribution of gas in the company's overall revenue and profits wasn't significant. "What was the urgency when the Supreme Court is going to hear the matter anyway? The price hike was approved in 2013; if it doesn't happen now, it is very likely it will not be announced before September," Tulsian said.
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Recently, Nitin Tiwari of Religare Capital Markets had told Business Standard if the gas price rise wasn't implemented, RIL's fair value would see an impact of Rs 5-10 a share. For the quarter ended December 2013, the company's exploration & production revenue stood at Rs 1,733 crore, merely 1.5 per cent of RIL's gross revenue ofRs 1,22,654 crore. The segment contributed less than five per cent to earnings before interest and tax.
Earlier, the government had said gas prices in India would be raised from $4.2 a million British thermal unit (mBtu) to $8.4 an mBtu. Reliance, which has seen its output fall in recent years, was expected to gain from this price rise. Oil and Natural Gas Corporation (ONGC), India's largest oil and gas producer, was also seen as benefiting from the price rise, given its output was much higher than RIL's.
Though the deferment of the price rise will have a bigger impact on ONGC than on RIL, the impact on the Mukesh Ambani-controlled company will be substantial if the price rise is deferred for long. RIL's gas production is expected to rise marginally to 15 million standard cubic metres a day in FY15, followed by a marginal increase in FY16, too. A substantial jump in output is expected only after FY17.
Therefore, the impact on RIL's earnings per share will be just Rs 2-3 in FY15 and FY16.