Hiral Vora, Reuters
Mumbai: Top private sector refiner and petrochemical firm, Reliance Industries Ltd, is expected to report on Thursday a 10.3% quarterly earnings rise, boosted by refining margins.
But Reliance, India’s largest listed company, which gets more than 60% of its revenue from a single 660,000 barrel per day refinery, is likely to show limited earnings growth in the fiscal year that began on 1 April because refining margins have peaked, analysts said.
The firm’s January-March refining margins are expected at more than $11 (Rs456) 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.
Reliance enjoys better refining margins because its Jamnagar refinery in western India is designed to process cheap and high sulphur grades of crude into high-value products.
They had hit $12.4 in April to June and fallen to $9.1 in the following three months.
“We don’t see much growth in Reliance for the 2008 fiscal as refining margin may remain flat as we expect crude oil price to rise,” said an analyst with a local brokerage.
The company, India’s most valuable at $51 billion, should post a net profit of Rs27.6 billion ($662 million) in the fiscal fourth-quarter ended 31 March, up from Rs25.02 billion a year earlier, a Reuters poll of 10 analysts showed.
Net sales are seen up 10.3% at Rs270.6 billion.
Reliance, 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.
Reliance derived 64% of its revenue from refining and 34% from petrochemicals in October to December.
Full-year earnings in 2006/07 are forecast to rise a fifth to Rs108.8 billion, according to Reuters Estimates. But earnings in 2007/08 are forecast only slightly higher at Rs109.6 billion.
Earnings will get a boost in 2008/09, when Reliance starts selling natural gas from its two deep-sea fields in the Krishna Godavari basin off the southern state of Andhra Pradesh.
Reliance aims to sign contracts by July this year to sell up to 80 million cubic metres of gas per day from mid-2008.
Shares in Reliance rose 7.7% in the March quarter, outperforming a 5.2% drop in the benchmark BSE index and a 4% rise in the sector index.
Last month, Reliance 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.