Earnings: Reliance Industries Q1 net profit up 13% YoY
Reliance Industries' net profit rose 13.22 per cent to Rs 4,110 crore for the first quarter ended June 30, 2008 compared to Rs 3,630 crore for the corresponding quarter a year ago. Total income increased 40.75 per cent to Rs 41,805 crore against Rs 29,721 crore for the same quarter last year. On BSE today, Reliance Industries shares closed up 1.81 per cent at Rs 2306.55 on volume of 12,34,443 shares.
Inventory gains to lift RIL profit
Investors and analysts are keeping their fingers crossed as they await the quarterly results of India’s largest private sector company — Reliance Industries (RIL). Analysts expect RIL’s profit growth to vary substantially between 9 per cent and 30 per cent.
In fact, a customary Bloomberg survey revealed that analysts expect a 24 per cent profit growth over the year-ago period, while a similar exercise by Reuters came out with a much lower profit growth expectation of 14 per cent. A lot will depend on how the company has treated its inventory gains and whether it has suffered any forex losses. Although there are differing views on RIL’s Q1 profits, most agree that RIL’s refinery business will put up a good show, while the petrochemicals business will suffer.
While gross refining margins (GRMs) have remained strong globally during the quarter, margins in petrochemicals business have weakened due to high naphtha prices. Petroleum refining contributed around 64 per cent to the company’s total revenues in FY08 against 34 per cent from petrochemicals. “We are expecting RIL to post $16/bbl GRM in the June 2008 quarter. The petrochemicals margins will be lower due to high naphtha prices, but the net profit should jump 27 per cent to Rs 4,150 crore. The future outlook is positive for the company due to production from KG basin and Reliance Petroleum (RPL) to start production from Q3FY09,” said Sudeep Anand, research analyst working with Religare Securities.
The private sector refiner is expected to benefit from the rise in the prices of crude oil and petroleum products during the June 2008 quarter, allowing it to book inventory gains. “It is mainly inventory gains that are pushing up GRMs of Indian refiners. When RIL publishes Q1 results on Thursday, we believe they may choose not to account for these inventory gains because of fear that high profits could invite a tax on windfall gains,” felt an industry observer.
“We are estimating $18-$19 as GRMs for RIL. However, they could cross $20 depending on inventory gains. On the other hand, profit from petrochemicals should be lower than the previous quarter,” said a research analyst working with a Mumbai-based international investment bank. Going forward, two major projects are scheduled for commissioning over the next six months, which will drive profit growth for the company. RIL’s 70 per cent subsidiary, RPL, is set to commission its 580,000 barrels per day (bpd) refinery, while its KG basin natural gas fields are likely to commence production anytime soon. On Wednesday, RIL scrip gained 5.16 per cent to Rs 2,265 in a euphoric market, when the Sensex spurted 5.94 per cent.
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Bharti Airtel Q1 net up 34%, beats forecast
Bharti Airtel Ltd, India's top mobile operator, beat forecasts on Thursday with a 34 percent rise in quarterly profit as it rode a boom in the world's fastest growing wireless market. Bharti, about 30 percent owned by Southeast Asia's top phone firm, SingTel, said consolidated net profit rose to Rs 2,025 crores ($484 million) under US accounting rules in its fiscal first quarter ended June, from Rs 1,512 crore a year earlier.
A news agency poll of 12 brokerages had forecast a net profit of Rs 1,934 crore for Bharti, which had 69.4 million mobile subscribers at end-June, up 63 percent from a year earlier. Bharti provides mobile services on the popular GSM platform in all of India's 23 service areas and accounts for nearly a quarter of the country's total mobile users.
It added 7.4 million users between April and June. The New Delhi-based firm mainly competes with No. 2 Reliance Communications and unlisted Vodafone Essar, controlled by Britain's Vodafone Plc. Shares in Bharti, India's fourth-most valuable firm at $36.4 billion, fell 12.6 percent between April and June compared with a 14 percent drop in BSE.
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Source: ET