Weak rupee, other income shore up RIL net by 19%

Firm beats Street estimates to post Rs 5,352-crore profit in June quarter

Buoyed by a weak rupee and a healthy increase in other income, Reliance Industries Ltd (RIL) beat Street estimates to post 19 per cent increase in net profit. Higher refining margins also helped the company’s earnings, even as natural gas production from its K-G basin dropped further.

For the quarter ended June, RIL reported a net profit of Rs 5,352 crore, against Rs 4,503 crore during the same quarter last financial year.

RIL plans to invest Rs 1.5 lakh crore in new projects across its business segments over the next few years. Its other income stood 33 per cent higher, at Rs 2,535 crore, against Rs 1,904 crore in the corresponding period last year, mainly on account of profit on sale of investments in the fixed-income instruments and higher average liquid investments, the company said in a press statement.



“There were no major surprises in the results. Other income helped net profit grow 19 per cent,” said Bhavesh Chauhan, senior research analyst, Angel Broking.

During the quarter, RIL recorded 4.6 per cent drop in turnover, to Rs 90,589 crore, against Rs 94,927 crore in the same period last year.

Exports were 3.2 per cent higher on a year-on-year basis, at Rs 57,026 crore, against Rs 55,261 crore in the corresponding period of 2012-13.

“Our performance this quarter reflects higher operating rates and embedded options in crude oil sourcing and product placement, given the size and scale of the refining business,” said RIL Chairman & Managing Director Mukesh Ambani, adding: “Robust growth in demand for petrochemical products augurs well for our biggest ever expansion programme.”

The company had achieved strong results during the first quarter while investing in projects that would provide sustainable advantage for a longer period, Ambani added.

“RIL’s profit is in line with Street expectation but Ebitda, at Rs 7,100 crore, disappoints. However, other income, higher than estimates, makes up for the disappointment on Ebitda,” said Nitin Tiwari, energy sector analyst, Religare Capital Markets.

The company’s gross refining margins, earnings from processing every barrel of crude oil, stood at $8.4 a barrel, against $7.6 a barrel during the first quarter of 2012-13. However, revenue for its refining and marketing segment decreased 4.6 per cent to Rs 81,458 crore, against Rs 85,383 crore during the June 2012 quarter.

On the exploration and production front, gas production from its KG-D6 field on the east coast dropped 53 per cent to 15.32 million cubic metres a day (mscmd). RIL had produced about 33 mscmd during the June 2012 quarter.

“Fall in production is mainly attributed to geological complexity, natural decline in the fields and higher-than-envisaged water ingress,” RIL said in its press statement.

The company, however, reported 84 per cent rise in revenue from its shale gas venture in the US because of rising production. The company has invested Rs 30,000 crore in its shale gas fields abroad.

While RIL’s petrochemical margins improved year-on-year, segment revenue remained almost flat at Rs 21,950 crore, against Rs 21,839 crore during the June 2012 quarter. Retail revenue rose 53 per cent to Rs 3,474 crore, against Rs 2,269 crore. Its cash reserves swelled to Rs 93,066 crore.

The company’s stock on Friday rose 0.67 per cent over its previous close on BSE to end the day at Rs 923.15.