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Reliance Industries Limited (RIL) on Friday surprised the Street, with better gross refining and petrochemical margins helping it post a 24 per cent increase in net profit for the third quarter of this financial year.
This was RIL's third straight quarterly net profit increase, at Rs 5,502 crore.
Ahead of its results, the company's stock closed at Rs 895.95 after gaining one per cent on BSE. Its global depository receipt was up six per cent at $34.69.
"RIL's performance has improved this quarter with margin expansion in petrochemicals and record earnings in the refining business," said Mukesh Ambani, chairman and managing director, RIL.
"We are investing over Rs 100,000 crore by expanding our petrochemical capacities and adding value to our refining business. These investments will secure a significant change in RIL's earning capacity on commissioning of these projects."
RIL's gross refining margins (GRM) at $9.6 a barrel were a surprise against $6.8 per barrel in the same period last year.
GRM is the difference between the crude oil price and total value of petroleum products produced by a refinery.
RIL owns and operates two state-of-the-art refineries at Jamnagar, Gujarat. These refineries can together process around 1.24 million barrels of crude every day, giving RIL the advantage of processing heavier grades of crude oil, which comes cheaper.
RIL's GRMs, however, scored lesser than Essar Oil's, which came in at $9.75 a barrel.
Bhavesh Chauhan, senior research analyst at Angel Broking, said: "RIL's top line and bottom line were above our estimates on account of higher than expected profitability from the refining segment. Gross refining margins per barrel came in at $9.6 vis-a-vis our expectations of $8.5. Hence, net profit grew 24 per cent to Rs 5,502 crore, above our estimate of Rs 5,100 crore. However, given the recent rise in the stock price, we maintain out neutral rating on the stock."
During the quarter, exports grew 16.6 per cent to Rs 66,915 crore quarter-on-quarter and net turnover increased 10 per cent to Rs 93,886 crore against Rs 85,135 crore earlier.
On a year-on-year basis, petrochemical revenue increased 11.4 per cent, from Rs 59,213 crore to Rs 65,950 crore, primarily on account of higher prices (10.8 per cent growth), while volumes have almost remained flat (up 0.6 per cent).