Natural gas production at Reliance Industries’ KG basin field may be consistently declining, but the company is likely to emerge as one of the outperformers in the June quarter. While aggregate earnings of Sensex stocks are forecast to grow less than 5%, RIL is expected to record a net profit growth of 13-15% during the quarter.
RIL is expected to benefit from marginally higher gross-refining margins — or GRMs in petroleum parlance, representing the differential between the cost of raw material and revenues from selling finished products — compared with the yearago period. Similarly, a 3.2% YoY depreciation in the rupee will mean more rupee profits per dollar of GRM.
GRMs contracted substantially in April-May 2013. But they improved in June 2013, taking the average for the quarter above the year-ago period. The expected GRM at $8.5 per barrel will be higher by nearly 12% YoY,
but down 16% from the preceding quarter.
Singapore complex margins, considered as a proxy in estimating RIL’s GRMs, declined 24% in April-June 2013 from the preceding January-March 2013 quarter. However, a fall in Brent-Dubai differential and lower LNG prices are likely to boost RIL’s premium over Singapore complex margins, according to a Nomura report.
The petrochemicals division is also expected to post robust numbers, thanks to higher global margins as well as an increase in customs duty on polymers. Oil and gas will be the only segment to prove a drag on the results as natural gas production has dipped to 15 mmscmd, 54% down from 32.5 mmscmd in the year-ago quarter.
RIL carries a chunk of foreign currency debt, but it is unlikely to book any mark-tomarket losses after the slide in the rupee. According to a Barclays report, RIL faces around . 6,000 crore in translation losses on its $12-billion forex debt, but the bulk of it will be capitalised.
Analysts will be looking out for some updates on new polyester capacity and other downstream expansion projects. They will also watch out for comments on how the proposed higher natural gas price would influence the company’s exploration programme, and on production improvement.
RIL is expected to benefit from marginally higher gross-refining margins — or GRMs in petroleum parlance, representing the differential between the cost of raw material and revenues from selling finished products — compared with the yearago period. Similarly, a 3.2% YoY depreciation in the rupee will mean more rupee profits per dollar of GRM.
GRMs contracted substantially in April-May 2013. But they improved in June 2013, taking the average for the quarter above the year-ago period. The expected GRM at $8.5 per barrel will be higher by nearly 12% YoY,
but down 16% from the preceding quarter.
Singapore complex margins, considered as a proxy in estimating RIL’s GRMs, declined 24% in April-June 2013 from the preceding January-March 2013 quarter. However, a fall in Brent-Dubai differential and lower LNG prices are likely to boost RIL’s premium over Singapore complex margins, according to a Nomura report.
The petrochemicals division is also expected to post robust numbers, thanks to higher global margins as well as an increase in customs duty on polymers. Oil and gas will be the only segment to prove a drag on the results as natural gas production has dipped to 15 mmscmd, 54% down from 32.5 mmscmd in the year-ago quarter.
RIL carries a chunk of foreign currency debt, but it is unlikely to book any mark-tomarket losses after the slide in the rupee. According to a Barclays report, RIL faces around . 6,000 crore in translation losses on its $12-billion forex debt, but the bulk of it will be capitalised.
Analysts will be looking out for some updates on new polyester capacity and other downstream expansion projects. They will also watch out for comments on how the proposed higher natural gas price would influence the company’s exploration programme, and on production improvement.
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