Oil and gas giant Reliance Industries Ltd clocked a 19 per cent increase in net profit to Rs 5,352 crore for the quarter ended June 30 riding on higher gross refining margin and better realisation in sale of diesel and kerosene. In the year-ago quarter, the company reported a profit of Rs 4,473 crore.
The gross refining margin (GRM) is the differential between the cost of a barrel of crude oil and the price at which its processed output can be sold.
In spite of the volatility in crude prices the company reported a GRM of $8.4 a barrel this quarter, against $7.6 in the comparable quarter last year.
Net sales for the quarter dipped marginally by 4.6 per cent to Rs 87,845 crore (Rs 91,975 crore).
RIL Chief Financial Officer Alok Agarwal, addressing the media, said net sales for the quarter were impacted by a slight dip in the refining and petrochemical business, which makes up 90 per cent of the revenues. Sales of middle distillate products such as diesel and kerosene, however, helped push up profits, he added.
He said interest costs were higher, at Rs 810 crore ($136 million) against Rs 784 crore in the corresponding previous period, principally due to rupee depreciation.
He said that RIL’s shale gas investments in the US continued to grow and the momentum remained strong in each of the joint ventures.
The company’s share of gross shale gas production stood at 37.7 billion cubic feet equivalent (BCFE) in Q1-FY14, which reflects a growth of 71 per cent on a year-on-year basis and 4 per cent over the preceding quarter.
Jagannadham Thunuguntla, Strategist and Head of Research, SMC Global Securities said: “The topline was below estimates and the bottomline was above estimates, helped by other income, which was 33 per cent of the profit before tax. The company’s heavy cash balance of about Rs 93,000 crore also benefited the other income.” “The game-changing time for Reliance will come when it discovers more gas and not when gas prices are hiked,” he added.
Ankush Mahajan, senior oil and gas analyst at K.R. Choksey, said: “We are positive on the stock as it would be benefited by the gas price hike, increase in production from MJ-01 wells and better outlook on GRM margins for refining business.”
Agarwal also said the other income was higher, at Rs 2,535 crore (Rs 1,904 crore), due to profit on sale of investments in fixed-income instruments and higher average liquid investments.
The Reliance stock closed at Rs 923.15 on the BSE on Friday, up 0.67 per cent over the previous close.
KG-D6 development
In another development, Petroleum Minister Veerappa Moily said the Government has approved a field development plan for KG-D6 proposed by Reliance Industries involving an investment of $1.53 billion.
RIL and its partners BP and Niko Resources Ltd currently produce about 14 mmscmd from the KG D6 block. The gas fields in the East Coast had hit a peak output of 69.43 mmscmd in March 2010.
According to estimates available with the Directorate-General of Hydrocarbons, the biggest gas field in the country would produce 19.178 mmscmd in 2013-14; 17.4 mmscmd in 2014-15; 15.027 mmscmd in 2015-16 and 19.781 mmscmd in 2016-17.