Reliance Industries slips on profit booking post Q4 results

Reliance Industries were trading lower by 1% at Rs 922 on the National Stock Exchange (NSE) in early morning trade on profit bookings.

The stock has rallied 16.5% from its 52-week low of Rs 796 touched on March 30, 2015, compared with 1.3% rise in the CNX Nifty till yesterday.

The company reported a better than expected 8.5% year-on-year jump in consolidated net profit at Rs 6,381 crore for the quarter ended March 2015 (Q4). The quarterly profit is highest in seven years.

The consolidated turnover was down 33% at Rs 70,863 crore, against Rs 106,208 crore during the year-ago period, primarily due to a 50% annual fall in benchmark oil prices.

A Bloomberg poll of 16 analysts had forecast a record net profit for the company, at Rs 5,932 crore. Net sales were expected at Rs 64,455 crore.

Greater fall in prices of naphtha as feedstock versus product prices helped in boosting petrochemical margins to 9.2% versus 8.1% a year ago while higher gasoline spread and favorable crude oil differentials helped in refining margin expansion to 8.7% versus 4.1% a year ago, said Piyush Jain, Equity Research Analyst, Morningstar Investment Adviser.

However, analyst maintains fair value of Rs 950 per share.

The result was largely immaterial and therefore, will not cause any change in our moat rating and fair value. Reliance remains no moat rated with the global refining business highly fragmented and fiercely competitive. Cost advantage through a low cost feedstock is the key source of competitive advantage for a refiner yet Reliance buys globally traded crude. Refining and petrochemicals are highly commoditized and cyclical industries, as reflected in our high fair value uncertainty rating, said Piyush Jain.

The stock opened at Rs 937 and has seen a combined around 500,000 shares changed hands on the counter till 0917 hours on the NSE and BSE.

Reliance Industries Limited (RIL)