Led by strong margins from its oil refining and petrochemical businesses, Mukesh Ambani-led Reliance Industries Ltd (RIL) on Friday reported a 19% year-on-year rise in net profit to Rs. 5,352 crore during the April-June quarter against Rs. 4,503 crore a year ago.
Net profit beat analyst estimates of Rs. 5,270 crore.
Sales fell 4.5% to Rs. 87,645 crore on the back of lower output from flagship KG-D6 gas fields.
The company that operates the world’s-biggest refining complex in western India saw its gross refining margins (GRMs) move up to $8.4 a barrel during the first quarter against $7.6 per barrel in the same period last fiscal.
GRM is the margin that the company earns in turning every barrel of crude oil into fuel in the refinery.
RIL shares closed at the six-month high of Rs. 923, up around 1%, on the Bombay Stock Exchange before the result announcement.
“RIL achieved strong results during the first quarter of 2013-14 while investing in projects that will provide sustainable advantage for a longer period,” chairman Mukesh Ambani said.
“Our performance this quarter reflects higher operating rates and embedded options in crude sourcing and product placement, given the size and scale of the refining business,” Ambani said.
“Retail business continues to make remarkable progress and registered a 53% growth in revenues during the first quarter.”
Revenues from shale gas production is now as big as its domestic businesses. Out of 600 wells, 500 are producing after the company invested $6 billion in US’ shale gas projects.
RIL’s other income was also higher at Rs. 2,535 crore ($427 million) against Rs. 1,904 crore a year ago mainly on account of profit on sale of investments in fixed-income instruments and higher average liquid investments.
RIL had cash and cash equivalents of Rs. 93,066 crore ($15.7 billion) that remained invested in various instruments. The company will invest Rs. 1.5 lakh crore on new projects.
“RIL has fully exhausted its refining capacity....we will start seeing capacity expansion only in the Q4 of this year but majority of capacity expansion will be in 2015-16 and 16-17....accordingly a substantial growth in core business will be seen only after this,’’ said Deven Choksey, managing director and CEO, KR Choksey Securities.