Mumbai: Shares of Reliance Industries Ltd on Friday fell as much as 6.5% after the company reported lower-than-expected September quarter earnings and announcement of further delay of commissioning of the petcoke gasification project. The RIL stock touched a low of 1,073.15 intraday, down 6.59% from its previous close. At 10.10am, the scrip was trading 4.45 lower at 1098 on BSE, while the Snesex fell 0.88% to 34,473.87 points. So far this year, Reliance shares have gained 19%.

RIL on Wednesday said its net profit rose 17.4% to 9,516 crore in the September quarter, while revenue rose 55% to 1.56 trillion. According to a Bloomberg poll of seven analysts, its consolidated net sales were expected to come in at 1.41 trillion. Net profit was estimated at 9,630.20 crore, according to 10 analyst estimates.

“We reiterate SELL given our concerns on persisting high capex, non-contributing C-WIP and rising debt levels, all of which constrain a sustainable improvement in return ratios and free cash flows in the medium term. The recent deterioration in refining and petchem margins may compound woes in the near term", said Kotak Institutional Equities in a note.

Gross Refining margin (GRM) dropped to $9.5 a barrel for the first time after 15 quarters. Analysts had expected RIL’s GRM to be in the range of $10-10.5/barrel against the $12/barrel it reported a year ago.

“We expect Singapore GRM to average $6/bbl, going forward. High oil prices, combined with narrowing light-heavy differential and weak demand, are likely to result in poor refining margins in the near term, though", said Motilal Oswal Seurities in a note to its investors.

Commercialisation of the petcoke gasification plant has been delayed again by about six months and is now due for commissioning by fourth quarter of fiscal year 2019. Four gasifiers are scheduled for the DTA refinery by Q4FY19 from Q2 FY19 guided earlier while the timeline for another six in SEZ refinery are unclear.

“We cut our FY19 EBITDA/PAT by 5%/10%, building the petcoke gasification impact from Q4 (earlier Q3) and slightly lowering our base GRM assumption besides taking higher interest from the depreciation of the rupee", Emkay Global said in a report.

Higher debt and capex also worried investors. RIL’s total capex remained higher at 39000 crore in second quarter out of which 16000 crore invested for Jio and 13000 crore for its standalone operations which resulted debt increasing by 20000 crore quarter on quarter to 1.80 trillion.

“We would wait for stabilization of capex at lower level and growth trajectory of Jio before assigning it a higher valuation", said IDBI Capital in a note to its investors. The brokerage firm has downgraded the stock to Hold and maintained its target price to 1200 a share.

“We expect significant monetization of GigaFiber business may take longer than expected time due to last mile connectivity issues. Though strategic investment in Hathway and Den would help speed up the work. Though, pricing pressure in Mobility business may keep ARPU at a lower level in near term.", the report added.