Reliance Industries (RIL) share price gained over 5 per cent on Monday after the company on Friday (post market hours) reported highest-ever quarterly net profit of Rs 6,720 crore for 3-month period ending September 30 on a spike in refinery and petrochemicals margins.
RIL net profit for July-September quarter of the 2015-16 fiscal rose 12.5 per cent to Rs 6,720 crore, or Rs 22.8 per share, from Rs 5,972 crore, or Rs 20.3 a share, in the same period of last fiscal, the company said in a statement. Sales however fell 33.8 per cent to Rs 75,117 crore on benchmark crude oil prices halving.
At 10.26 am, RIL share price was trading 4.87 per cent up at Rs 956.60. The scrip opened at Rs 941.60 and had touched a high and low of Rs 960 and Rs 940.60, respectively, in trade so far. Sensex was up 0.29 per cent at 27,292.50.
Later, the scrip closed 5.61 per cent up at Rs 963.40.
The GRMs (Gross Refining Margins) in September quarter were at 7-year high and the company’s Jamnagar refineries in Gujarat earned $4.3 per barrel more than Singapore average.
Market analysts are bullish on RIL shares. Sharekhan in a research note said, “RIL’s Q2FY2016 result beat Street’s estimate with substantially high GRM. We have raised our earnings estimate by around 3 per cent for FY2016 but retained our estimate for FY2017. We remain positive on the stock, given the strong performance in this quarter and potential earnings improvement in future, post commissioning of the ongoing large projects (petcoke gasification plant in Jamnagar refinery, expansion of petchem capacities). However, in near term, the launch of Jio and its response would be a key event to watch out for. We retain our ‘Buy’ rating on the stock with an unchanged price target of Rs 1,100.”
Goldman Sachs also maintained a ‘buy’ rating on RIL. The broker says while the record high premium to Singapore GRM could be difficult to maintain, RIL may benefit from the refining upcycle starting 2016 and completion of key projects such as petcoke gasification and ROGC. Goldman Sachs expects petchem margins to be steady particularly in the ethylene chain on improving supply demand balance over the medium-term.
(With inputs from agencies)