Mumbai: Reliance Industries’ quarterly profit rose for the first time in five quarters as higher gas production from its fields off India’s east coast helped offset weak oil refining margins.
Analysts say Reliance, controlled by billionaire Mukesh Ambani, should benefit as refining margins recover after almost halving in the December quarter, and as gas output from its field in the Krishna Godavari (KG) basin reaches a peak of 80 million standard cubic metres a day (mmscmd) by April.
Reliance, India’s largest conglomerate with interests in petrochemicals, refining, oil and gas exploration, and retail, is looking to buy bankrupt petrochemicals maker LyondellBasell for around $13.5 billion to give it greater access to lucrative Western markets.
The company’s outlook will be determined by how that bid progresses, and also by the outcome of a long-running dispute with Reliance Natural, led by Mukesh’s younger brother Anil, over the terms of a deal to sell gas to Reliance Natural at below the price set by the government.
Reliance Industries, India’s top refiner and petrochemicals producer, posted October-December net profit of Rs4,008 crore versus Rs3,462 crore a year earlier.
Reliance said the results had been reworked and restated to include figures from Reliance Petroleum, which it absorbed last year.
A Reuters poll had forecast net profit of Rs3,960 crore.
Last year, Reliance had pumped at only about 60% of its current 60 million standard cubic metres a day (mmscmd) capacity from its KG basin find, as the government, which has the power to decide who buys gas and at what price, initially selected customers for only 40 mmscmd of gas.
The government has since allocated more supplies from India’s biggest gas find, helping Reliance boost output.
On Friday, Reliance said production had risen to 60 mmscmd.
Reliance’s refining margins fell to 5.9 per barrel in its fiscal third quarter, from $10 a year earlier. Analysts had expected $5.3 per barrel.
Shares in Reliance, India’s biggest listed firm worth about $79 billion, rose more than 1% on the news, after being down more than 2% earlier, in a Mumbai market that was down 0.8%.