Reliance Industries Ltd (RIL) posted a 28% increase in its second quarter profit (compared with a year ago) on the back of higher earnings from oil refining and chemicals. The Rs3,837 crore net profit bettered the Rs3,300 crore market expectations of seven analysts polled by Bloomberg. Revenues rose 6% to Rs33,402 crore.

In a statement issued on Thursday, RIL said it earned $13.6 (Rs537.20) from processing each barrel of oil into fuels, compared with $9.1 a year ago. Profit from the refining and marketing business rose 56%, from Rs1,486 crore in the second quarter of last year to Rs2,321 crore in the quarter ended 30 September 2007.

RIL’s performance counters that of US rivals, including Valero Energy Corp. and Chevron Corp., the two largest refiners in the country that last week said their third quarter profit declined because of lower earnings from processing oil into fuels. RIL’s chemicals business, which accounts for around 35% of revenues, contributed to the growth in earnings.

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In the morning, expectations of better than expected results pushed RIL’s shares to an all time high of Rs2,805 each on the Bombay Stock Exchange (BSE) pushing up its market capitalization to Rs4.07 trillion. By close, BSE’s benchmark index, the Sensex, had fallen 717 points and the company’s market cap had dropped to Rs3.58 trillion.

RIL’s shares closed 4.25% lower at Rs2,575.90 each. The Sensex fell 3.83% to close at 17,998.39 and the BSE oil index was down by 3.63% at 10,562.90 points.

Over the past three weeks, the company’s shares rose 12.5%, shooting up from Rs2,289.35 a share on 1 October to touch a peak of Rs2,690.30 on Wednesday.

RIL announced its earnings after the markets closed. Mehul Kukati, an energy analyst at Emkay Share and Stock Brokers Ltd, said that he could think of no specific reason for the spurt in the company’s shares in recent days.

“The company has huge expansion plans and rising profits give Reliance the confidence to execute them," Karthik Ramakrishnan, an analyst at Mumbai-based Sunidhi Consultancy, said before the earnings announcement. “Profits will continue to be driven by high refining margins and petrochemicals."

PTI contributed to this story.

Dinakar Sethuraman and Manash Goswami are with Bloomberg.