Reliance Industries dips post Q3 results

Reliance Industries (RIL) was down 2.5% at Rs 1,050 on the BSE in intra-day trade after the company reported 10% year on year (YoY) growth in its standalone net profit at Rs 8,022 crore for the quarter ended December 31, 2016 (Q3FY17) on account of a higher than expected margins in the refining and petrochemical businesses and a higher other income. The company had reported profit of Rs 7,296 crore in the same quarter last fiscal year.

Income from operations during the quarter under review increased 8.9% at Rs 66,606 crore on YoY basis, while other income rose 32.6% or by Rs 744 crore to Rs 3,025 crore over the previous year quarter.

“Increase in revenue is primarily on account of increase in prices of refining and petrochemical products led by 13% increase in Brent crude prices,” RIL said in a statement.

The company’s gross refining margin, or GRM, was reported at $10.8 per barrel, sequentially higher than the $10.1 per barrel, and lower than the $11.5 per barrel in the same quarter a year ago.

Analyst at Sharekhan expect the refining margin to remain firm, as oil demand growth is likely to be strong at around 1.3mbpd in 2017 according to International Energy Agency estimate. Moreover, the likely commissioning of RIL’s petcoke and RoGC projects would fuel earnings growth from H2FY2018.

Any positive news flow from Reliance Jio (in terms of subscriber retention after the completion of the free offer on March 31, 2017) could act as a positive trigger for RIL, the brokerage firm said in a report and maintain ‘Buy’ rating and price target of Rs 1,300.

Antique Stock Broking also maintains ‘BUY’ rating on RIL with a target price of Rs 1,255.

“In our view while FY18e earnings could come under pressure on account of a) delayed commissioning of petcoke gasifiers & ROGC, and b) operating losses in R-JIO once the promotion offer ends, and earnings are accounted for, FY19e earnings would stand better on earnings accretion from petrochemical expansion,” the brokerage firm said in Q3 result review.

“On the back of expected completion of its core business expansion by the Q1FY18E, RIL seems well positioned to cater to expected improvement in global demand in the next couple of years. However, near-term stock performance hinges on early turnaround in telecom operations,” said analysts at Emkay Global Financial Services in result update.

At 10:19 am; the stock was trading 2.4% lower at Rs 1,050, extending its Monday’s 1.2% decline on the BSE. The S&P BSE Sensex was trading flat at 27,285. A combined 3.14 million shares changed hands on the counter so far on the BSE and NSE.

However, in past two months, the stock had outperformed the market by gaining 10% as compared to 3.6% rise in the benchmark index till Friday, January 13, 2017.