Reliance Industries gains post Q1 earnings

The stock was up nearly 3% at Rs 1,039 on the BSE in early morning trade.

Reliance Industries (RIL) was up nearly 3% to Rs 1,039 on the BSE in early morning trade after the company post market on Friday reported gross refining margin (GRM) of $11.5 a barrel in the June 2016 quarter (Q1), ahead of Street expectations of $9-10 a barrel. The GRM stood at $10.4 a barrel in the year-ago quarter, and at $10.8 a barrel in March 2016 quarter.

The company’s consolidated net profit (after taxes, minority interest and share in profit/(loss) of associates and joint ventures) grew 18.1% to Rs 7,113 crore, even as net sales or income from operations fell 15.2% to Rs 64,990 crore, compared to the year-ago period. RIL had reported net sales of Rs 76,615 crore and net profit of Rs 6,024 crore in the June 2015 quarter. LINK

“Due to better risk management and inventory gain of $2/bbl result came significantly above estimates on strong set of GRM around $11.5/bbl against our and consensus estimates of $9.7/bbl,” Emkay Global Financial Services said in a results update.

On the back of expected completion of its core business expansion by end of FY17, RIL is at a sweet spot to cater expected improvement of global demand in the next 2 years. Thus, we maintain BUY recommendation with target price of Rs 1,160, added report.

“AT USD 11.5/bbl, 1QFY17 GRM stood ahead of our/street estimates primarily on stronger middle distillate cracks offsetting weakness in light distillate spreads, effective hedging of crack spreads and plausible inventory gains. With global oil demand growth at 1.3-14.mbpd, stronger that initial expectation, we expect refining environment outlook to remain benign,” according to Antique Stock Broking. The brokerage firm maintains Buy rating of the stock with target price of Rs 1,280.

At 09:36 AM, the stock was up 2% at Rs 1,032 on the BSE. A combined 2.87 million shares changed hands on the counter on the BSE and NSE so far.