RIL is making money from money, not from oil

Reliance Industries reported a net profit of Rs 4,236 crore for the quarter ended March 2012, slightly below market expectations of Rs 4,300 crore. The profit is 21 percent down from a year ago and 4.6 percent down from the previous quarter.

The company was saved the blushes of a more serious drop in net profits by its huge cash hoard, which pushed up other income by 33 percent to Rs 2,295 crore from the preceding quarter, and a two-and-a-half times jump from other income in the corresponding quarter of 2010-11. As a percentage of profit before tax, other income stood at 42 percent, up from 29 percent in the previous quarter.

Net sales for the January-March quarter came in at Rs 85,182 crore, up from Rs 72,674 crore a year ago.

In a press statement, Chairman and Managing Director Mukesh Ambani, said Reliance had delivered “industry leading performances.” “We have created a strong foundation for future growth and are investing in our core upstream and petrochemical businesses in India,” he said.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

[caption id=“attachment_282882” align=“alignleft” width=“380” caption=“The profit is 21 percent down from a year ago.”]  [/caption]

The gross refining margin (GRM), a keenly watched measure of profitability of its refining operations, logged in at $7.6 dollars per barrel for the quarter. The refining margin is the difference between the total value of petroleum products and the price of crude.

Analysts expected the GRM to be largely flat from the previous quarter, when the margin came in at $6.8 a barrel.

The company’s three main businesses – refining, petrochemicals and oil and gas – present a mixed picture.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

Margins for earnings before interest and tax (Ebit) in refining, the biggest segment, comprising 76 percent of revenues, remained unchanged at 2.2 percent.

Ebit margins in petchem, which accounts for 21 percent of revenues, slipped to 10.2 percent from 10.9 percent in the previous quarter. That’s a decline of 70 basis points versus market expectations of a decline of 15 percentage points (100 basis points = 1 percentage point).This is the segment in which Reliance blew all expectations out of the water.

In the oil and gas segment, Ebit margins came in at 36.5 percent.Volumes stood at 113.87 billion cubic feet, down from 133 bcf in the previous quarter, and higher than market expectations. However, a drop in gas output volumes had already been factored into the stock’s price.

Overall, the top disappointments have been the petrochemical margins and gas output. The positive is that the company posted a better-than-expected GRM.

Annual performance:

For the entire financial year, Reliance’s standalone revenues were up 31 percent to Rs 3339,792 crore, while net profit declined 1.2 percent to Rs 20,040 crore.

GRM came in at $8.6 per barrel for the year ended 31 March, 2012, up from $8.4 per barrel from a year ago.

Cash and cash equivalents at the end of the year totalled Rs 70,252 crore.

The company has proposed a final dividend of Rs 8.5o per share.

Reliance’s shares has been under pressure for the past two days due to concerns over the results.The stock ended on Friday down 1.5 percent at Rs 731.

[caption id=“attachment_282931” align=“alignleft” width=“580” caption=“Source: Reliance Industries Ltd”]  [/caption]