India’s largest company by market value Reliance Industries could well see renewed interest from investors soon after a sustained period when the stock was languishing after the company cut back on its gas production and analysts were skeptical about its earnings growth. Its results for the quarter to December 2012 exceeded analysts expectations by a wide margin, powered by its refining business. At . 5,502 crore, RIL’s net profit in the third quarter was its third-best ever. That, too, when there has been an overall weakness in refining margins for the December quarter. RIL went on to post its highest-ever profits from this segment at . 3,615 crore.
The gross refining margin was an impressive $9.6 per barrel. This not only bettered its year-ago number of $6.8, which was on expected lines, but also beat its September 2012 quarter number of $9.5, when most analysts had pegged their forecasts between $8.5 and $9 for the quarter. In comparison, the performance of its two other major segments — petrochemicals and oil and gas — were dismal, just in line with market expectations. The petrochemicals segment faced margin pressure and posted a lower profit of 10% inspite of a 11% spurt in revenues. But the declining natural gas production from KG-D6 led to a 32% drop in revenues and 54% drop in profits from the oil and gas segment. The quarter was also marked by a reduced importance of other income in the overall profit of the company. From an average of 33% of pre-tax profits in the April-September 2012 period, the proportion of other income has dropped to 25%. A reduced tax provisioning at 19.7% of pre-tax profit compared to 22.6% in the year-ago period also contributed to the stellar performance.
RIL was also debt-free at end December 2012, with cash of . 80,962 crore, way higher than its . 72,266-crore debt. This despite using . 3,085 crore of cash for its share buyback programme. Analysts are not certain if this performance can be sustained. For RIL’s investors, the 24% y-o-y jump in net profit is a welcome breather after a fall in profits for the last four consecutive quarters. The December quarter show may well be the trigger for renewed investor interest in the company.
The gross refining margin was an impressive $9.6 per barrel. This not only bettered its year-ago number of $6.8, which was on expected lines, but also beat its September 2012 quarter number of $9.5, when most analysts had pegged their forecasts between $8.5 and $9 for the quarter. In comparison, the performance of its two other major segments — petrochemicals and oil and gas — were dismal, just in line with market expectations. The petrochemicals segment faced margin pressure and posted a lower profit of 10% inspite of a 11% spurt in revenues. But the declining natural gas production from KG-D6 led to a 32% drop in revenues and 54% drop in profits from the oil and gas segment. The quarter was also marked by a reduced importance of other income in the overall profit of the company. From an average of 33% of pre-tax profits in the April-September 2012 period, the proportion of other income has dropped to 25%. A reduced tax provisioning at 19.7% of pre-tax profit compared to 22.6% in the year-ago period also contributed to the stellar performance.
RIL was also debt-free at end December 2012, with cash of . 80,962 crore, way higher than its . 72,266-crore debt. This despite using . 3,085 crore of cash for its share buyback programme. Analysts are not certain if this performance can be sustained. For RIL’s investors, the 24% y-o-y jump in net profit is a welcome breather after a fall in profits for the last four consecutive quarters. The December quarter show may well be the trigger for renewed investor interest in the company.
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