RIL Q2 PAT up 15.8% at Rs 5703cr, GRM below expectations

Robust refining margins—which are directly co-related to crude oil prices—helped Reliance Industries (RIL) to meet analyst expectations on the bottomline. At the same time, revenues from the exploration & production business fell sharply, offsetting much of the gains from higher volume sales and price hikes.

RIL’s July-September quarter net profit rose 15.8% year-on-year, to Rs 5,703 crore. This was marginally lower then the CNBC-TV18 poll projecting the bottomline at Rs 5,750 crore. Net turnover for the quarter rose 35% to Rs 80,790 crore, better than the poll estimate of Rs 79,800 crore.

“The increase in profits was largely driven by improved performance in the refining and petrochemicals business. All our manufacturing facilities operated at record levels with refineries achieving operating rates of 110%. RIL has strong balance sheet and sustained earning base to pursue growth opportunities,” said, chairman and managing director  Mukesh Ambani in the earnings release.

Here is a quick look at how each of the key segments fared.

OIL AND GAS (exploration and production):
Segment revenue:                         Rs 3,563 crore, down 17.2% y-o-y

Earning before interest and taxes: Rs 1531 crore, down 10.2 % y-o-y

The company in a statement said that production from KG-D6 was 2.7 million barrels of crude oil, and 303.4 BCF of natural gas, a reduction of 42.1% and 20.3% respectively  y-o-y.The reduction in production was mainly due to reservoir complexity. Production of gas condensate was 0.40 million barrels, an increase of 26.3 % over the previous period. 
Gas was sold as per the Government’s Gas Utilization Policy and at a price of $ 4.2 /MMBTU.

REFINING AND MARKETING

 Segment revenue: Rs 68,096 crore, up 37% y-o-y

Segment EBIT:       Rs 3,075 crore, up 40.3% y-o-y

RIL, which operates the world's biggest refining complex in western India, said gross refining margins were at $10.1 per barrel but did not immediately provide year-ago numbers. The margins had been at $10.3 a barrel in the previous quarter. The company also said that the refining and marketing segment achieved a record revenues due to higher prices which accounted for 38.0% growth in revenue while increase in volume accounted for 3.5% growth in revenue.

 PETROCHEMICALS

Segment revenue: Rs 21,066 crore, up 39.5% y-o-y

Segment EBIT:      Rs 2,422 crore, up 10.2%

However, segment EBIT would have been higher if not for spiralling depreciation cost.

Meanwhile, have a quick glance at the company's half yearly performance

- Turnover increased by 36.0% to Rs 164,479 crore ($ 33.6 billion)
- Exports increased by 52.2% to Rs 101,872 crore ($ 20.8 billion)
- PBDIT increased by 9.0% to Rs 21,950 crore ($ 4.5 billion)
- Profit Before Tax increased by 19.6% to Rs 14,581 crore ($ 3.0 billion)
- Cash Profit increased by 4.6% to Rs 17,828 crore ($ 3.6 billion)
- Net Profit increased by 16.3% to  Rs 11,364 crore ($ 2.3 billion)
- Gross Refining Margin at $ 10.1/bbl for the quarter and $ 10.2/bbl for the half year ended 30th September 2011

Source: Moneycontrol.com

RIL Q2 PAT up 15.8% at Rs 5703cr, GRM below expectations

Robust refining margins—which are directly co-related to crude oil prices—helped Reliance Industries (RIL) to meet analyst expectations on the bottomline. At the same time, revenues from the exploration & production business fell sharply, offsetting much of the gains from higher volume sales and price hikes.

RIL’s July-September quarter net profit rose 15.8% year-on-year, to Rs 5,703 crore. This was marginally lower then the CNBC-TV18 poll projecting the bottomline at Rs 5,750 crore. Net turnover for the quarter rose 35% to Rs 80,790 crore, better than the poll estimate of Rs 79,800 crore.

“The increase in profits was largely driven by improved performance in the refining and petrochemicals business. All our manufacturing facilities operated at record levels with refineries achieving operating rates of 110%. RIL has strong balance sheet and sustained earning base to pursue growth opportunities,” said, chairman and managing director  Mukesh Ambani in the earnings release.

Here is a quick look at how each of the key segments fared.

OIL AND GAS (exploration and production):
Segment revenue:                         Rs 3,563 crore, down 17.2% y-o-y

Earning before interest and taxes: Rs 1531 crore, down 10.2 % y-o-y

The company in a statement said that production from KG-D6 was 2.7 million barrels of crude oil, and 303.4 BCF of natural gas, a reduction of 42.1% and 20.3% respectively  y-o-y.The reduction in production was mainly due to reservoir complexity. Production of gas condensate was 0.40 million barrels, an increase of 26.3 % over the previous period. 
Gas was sold as per the Government’s Gas Utilization Policy and at a price of $ 4.2 /MMBTU.

REFINING AND MARKETING

 Segment revenue: Rs 68,096 crore, up 37% y-o-y

Segment EBIT:       Rs 3,075 crore, up 40.3% y-o-y

RIL, which operates the world's biggest refining complex in western India, said gross refining margins were at $10.1 per barrel but did not immediately provide year-ago numbers. The margins had been at $10.3 a barrel in the previous quarter. The company also said that the refining and marketing segment achieved a record revenues due to higher prices which accounted for 38.0% growth in revenue while increase in volume accounted for 3.5% growth in revenue.

 PETROCHEMICALS

Segment revenue: Rs 21,066 crore, up 39.5% y-o-y

Segment EBIT:      Rs 2,422 crore, up 10.2%

However, segment EBIT would have been higher if not for spiralling depreciation cost.

Meanwhile, have a quick glance at the company's half yearly performance

- Turnover increased by 36.0% to Rs 164,479 crore ($ 33.6 billion)
- Exports increased by 52.2% to Rs 101,872 crore ($ 20.8 billion)
- PBDIT increased by 9.0% to Rs 21,950 crore ($ 4.5 billion)
- Profit Before Tax increased by 19.6% to Rs 14,581 crore ($ 3.0 billion)
- Cash Profit increased by 4.6% to Rs 17,828 crore ($ 3.6 billion)
- Net Profit increased by 16.3% to  Rs 11,364 crore ($ 2.3 billion)
- Gross Refining Margin at $ 10.1/bbl for the quarter and $ 10.2/bbl for the half year ended 30th September 2011

Source: Moneycontrol.com

Reliance Industries Limited - Dewang K Mehta

Dear All,

According to me, if there is one stock that impacts the Nifty single handedly then it would be Reliance Industries Limited. This stock has been in a large trading range which can be broadly stated from 850 to 1250 since the start of 2009.

Stocks that stay range bound for such a long time are best traded by the book wherein you buy in parts at supports and sell in parts at the resistance levels. So looking at this range ideally buying should start below 910 levels till 800 and selling should start above 1000 levels going till 1100.

We have highlighted the support and resistances zones in this chart too with black and red highlights respectively. With the S&P CNX Nifty placed in its support zone and with Reliance Industries too entering the lower band of its support with a close around 827 I believe that this stock should soon begin to impact the movement of the Nifty.

As mentioned earlier the prudent bet is to go long Reliance at 827 with a stop of 794 and a target of 958 for starters. However I would be ultra-careful while buying this stock because usually when a stock breaks such a large consolidating / trading range the up or the down moves are too heavy, too fast and too high. So even if you do decide to invest, buy in small quantities with the willingness to average it below 700 levels.

Following is the post to our S&P CNX Nifty view: http://denipconsultants.blogspot.com/2011/07/s-cnx-nifty-still-bearish-dewang-k.html

Thanks,

Dewang K Mehta

DENIP Consultants 

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