Mumbai: India’s top private sector refiner and petrochemicals company, Reliance Industries Ltd (RIL) is expected to report a 10.3% rise in quarterly earnings on Thursday, boosted by refining margins.
The company, India’s most valuable at $51 billion (Rs2.14 lakh crore) by market capitalization, should post a net profit of Rs2,760 crore in the fourth-quarter (Q4) ended 31 March, up from Rs2,502 crore a year earlier, a Reuters poll of 10 analysts showed.
Net sales are seen up 10.3% at Rs27,060 crore.
But RIL, India’s largest listed company, which gets more than 60% of its revenues from a single 660,000-barrels-per-day refinery, is likely to show limited earnings growth in the financial year that began on 1 April (2007-08), because refining margins have peaked, analysts said.
The firm’s January-March refining margins are expected at more than $11 a barrel, higher than the benchmark Asian Dubai crack margin, which averaged less than $7 in the quarter. The company said it earned $10.3 a barrel in the year-earlier period.
RIL enjoys better refining margins because its Jamnagar refinery in western India is designed to process cheap and high sulphur grades of crude oil into high-value products.
Refining margins hit $12.4 in April-June and had fallen to $9.1 in the following three months.
“We don’t see much growth in Reliance for the 2008 fiscal as refining margins may remain flat as we expect crude oil price to rise,” said an analyst with a local brokerage.
RIL, also the world’s top maker of polyester and fibre yarn, may have had lower margins in its petrochemicals segment due to a drop in polyester margins, brokerage Motilal Oswal said in a research note.
The company derived 64% of its revenues from refining and 34% from petrochemicals in October-December.
Full-year earnings in 2006-07 are forecast to rise one-fifth to Rs10,880 crore, according to Reuters’ estimates. But earnings in 2007-08 are forecast only slightly higher at Rs10,960 crore.
The earnings will get a boost in 2008-09, when RIL starts selling natural gas from its two deep-sea fields in the Krishna-Godavari basin off Andhra Pradesh.
RIL aims to sign contracts by July this year to sell up to 80 million cubic metres of gas per day from mid-2008.
The company’s shares rose 7.7% in the March quarter, outperforming a 5.2% drop in the benchmark Bombay Stock Exchange index and a 4% rise in the sector index.
Last month, RIL said it would absorb its unit Indian Petrochemicals Corp. Ltd, which analysts said would help it capture about two-thirds of the country’s petrochemicals market.