Energy major Reliance Industries posted a 30 per cent rise in quarterly profit, missing forecasts, and said it is on the lookout for more shale gas joint ventures as it builds up its overseas operations.
Lower-than-expected refining margins offset gains from higher gas output for Reliance, India's biggest listed firm with a market value of about $78 billion.
The company said the market's margin expectations had been unrealistic, and that gross refining margins should be better in the 2010/11 financial year than in 2009/10. Analysts expect margins to rise as the global economy recovers.
"I think they (analysts) expected just too much in terms of refining margins," Reliance's chief financial officer, Alok Agarwal, told reporters.
Reliance, with interests in petrochemicals, refining, oil and gas exploration, and retail, posted January-March net profit of Rs 47.1 billion ($1.1 billion) versus Rs 36.3 billion a year earlier. Year-ago results were restated to include figures from Reliance Petroleum, which it absorbed last year.
Margins at Reliance's flagship refining business stood at $7.5 a barrel for the quarter, but lagged market estimates of $8.3 a barrel.
"Except for the GRMs (gross refining margins), there is no disappointment with the results. If GRMs are weak again next quarter, only then we may have to review," said Deven Choksey, chief executive of KR Choksey Shares & Securities.
A Reuters poll had forecast quarterly net profit of Rs 51.9 billion.
The company, which recently said it would pay $1.7 billion to form a joint venture with Atlas Energy at one of the most promising natural gas deposit regions in the United States, was evaluating further such opportunities in shale gas, Agarwal said.
India's largest listed conglomerate, controlled by billionaire Mukesh Ambani, has been scouting for acquisitions overseas, and progress on that front will determine its outlook.
"We continue to seek growth opportunities within India and globally to accelerate further value creation," Ambani said in a statement.
The outcome of a long-running gas dispute with Reliance Natural, led by Mukesh's younger brother Anil, will also have a bearing on the company's outlook.
Reliance is unable to hit peak gas production of 80 million standard cubic metres a day (mmscmd) at its D6 block in the vast Krishna Godavari basin in the Bay of Bengal due to customers not buying allocated volumes, and a lack of pipelines.
But analysts say current production of 60 mmscmd is still enough to boost results. Reliance began pumping gas from the block in April last year.
Shares in Reliance have dropped 8 per cent in the past two weeks, while the broader Mumbai market is down 2.6 per cent.