Despite a dip in gas production Reliance Industries Ltd (RIL) posted a better than expected result for the first quarter of 2012-13 on Friday. A 21 per cent drop in net profit at Rs 4,473 crore (Rs 5,661 crore a year-ago) was counter balanced by a key metric,its gross refining margin.
The margin measuring the difference in the price of the petroleum product sold and the price of the crude per barrel improved to $7.6 in this quarter from the analysts expectation of $7 and even better than the Singapore benchmark of $6.6.
As a result on a sequential basis the company did better. Its net profit rose by almost 6 per cent to Rs 4,473 crore ( Rs 4,236 crore in the January-March quarter) of last fiscal. Muted expectations meant earlier in the day RIL shares closed 0.70 per cent down at Rs 722.65 on the BSE.
Summing up the result Jagannadham Thunuguntla head of research,SMC Global Securities said the company has posted about $1 per barrel premium over Singapore (margins) which is significant premium. So this is a definite improvement.
The top line of Indias largest listed company by market cap was up nearly 13.4 per cent at Rs 91,875 crore as against Rs 81,018 crore in same quarter of last year. But significantly the percentage of other income has shrunk somewhat to 35 per cent from 42 per cent a quarter before,though it has risen by a massive Rs 1,904 crore. Company chairman Mukesh Ambani said RIL has improved its earnings profile as profits from operations were higher on a sequential basis on the back of volume growth in the refining business. We have commenced our next phase of capital investments in the refining and petrochemical segments to enhance earnings and value of our core energy businesses.
RILs cash reserves rose to Rs 70,732 crore at the end of June. The company has seen its cash holdings multiply in the last two years,resulting in a disproportionate increase in profits from treasury operations.
A company release noted that the higher net profit on a trailing quarter basis was due to higher income from operations and deferred tax reversal in the current quarter,partly impacted by lower portfolio of other income. Operating profits have also improved on a trailing quarter basis suggestive of an improving earnings profile, it said.
The flagship KG-D6 field of RIL produced 0.9 million barrels of crude oil,and 104.40 BCF of natural gas,which was lower by 36.7 per cent and 33.1 per cent respectively over the previous period.