Reliance Industries (RIL) shares slipped as much as 1.87 per cent in early trade on Friday after the company reported 22.89 per cent fall in net profit at Rs 7206 crore for the quarter ended September 2016 against Rs 9345 crore in the corresponding quarter a year ago. However, gross sales of the company increased by 9.61 per cent year-on-year to Rs 81,651 crore against Rs 74,490 crore in the same quarter last year.
At 9.59 am, RIL was trading 1.98 per cent down at Rs 1066.90. The scrip opened the day at Rs 1099 and had touched a high and low of Rs 1,099 and Rs 1,065.10, respectively, in trade so far. Benchmark BSE Sensex was down 127.58 points at 28,002.26.
Consolidated operating profit of the company climbed 26.09 per cent year-on-year to Rs 13,569 crore for the quarter under review against Rs 10761 crore in the same quarter last fiscal.
On a standalone basis, RIL reported 17.91 per cent year-on-year growth in net profit at Rs 7,704 crore against Rs 6,534 crore in the same period last year.
Sharekhan in a research note said, “During Q2FY2017, the refining business performance was in line with a softer gross refining margin (GRM), but we expect it to improve in Q3FY2017, considering the favourable seasonality. Further, the Petchem business surprised positively in Q2FY2017 and therefore, we have fine-tuned our earnings estimates for FY2017 and FY2018. In FY2018, the benefit of large capex in the downstream business is likely to yield positive results and will continue to drive earnings, whereas the Oil & Gas business will remain subdued. Currently, RIL’s stock price seems to be factoring in concern related to the huge capital allocation in Telecom (the stock is trading at 9.5x its FY2018 earnings). But, any positive surprise (in terms of market response or visibility) could act as a positive trigger. Hence, we retain ‘Buy’ on RIL with a revised target price of Rs 1,300.”