Reliance Industries extends gain post Q1 earnings

The stock rallied 5% to Rs 1,026 from Rs 977 in past two trading sessions on the Bombay Stock Exchange.

Reliance Industries (RIL) is trading higher by 3% at Rs 1,025, extending its Monday’s 2% gain, after reporting a better-than-expected 14% year on year jump in net profit at Rs 5,957 crore for the quarter ended June 30, 2014 (Q1).

Analysts, on an average, had expected profit of Rs 5,462 crore for the quarter. The company had profit of Rs 5,237 crore in the same quarter last fiscal.

The stock opened at Rs 1,005 and touched a high of Rs 1,026 on BSE. A combined 2.36 million shares changed hands on the counter so far on BSE and NSE. Most of brokerage houses recommend ‘buy’ rating on the stock with target price between Rs 1,100 to Rs 1,200.

“We are confident that the new gas price would be announced before 3QFY15. Further, there are multiple growth drivers for RIL. Strong GRM, output from MA fields and increase in petchem/polyesters capacity are drivers for FY15/16,” says analyst at HDFC Securities.

Analyst at KR Choksey believes that Asian refining margins for the coming quarters will marginally improve with the increasing demand. RIL will further gain from efficient crude sourcing and product placement.

We expect RIL's GRMs to be around $8.5-9.0/bbl in FY15 and FY16 (will go up by $2.5/bbl post commissioning of petcoke regasification terminal). We expect recovery in downstream demand and improvement in global operating rates and it would be positive trigger for petchem, says analyst.

Meanwhile, the foreign institutional investors have hiked their stake in RIL to a seven-year high at 19.91% in the latest quarter ended June 2014, from 18.61% at the end of previous quarter.

This is the highest level of FIIs’ holding in RIL since September 2007, when their stake stood at 20.64%. The all-time high FII stake in RIL was witnessed in September 2005, when overseas investors held 22.93% shareholding in the company, shows data available with BSE.