Reliance Industries Ltd (RIL)?s second quarter net profit rose 7.4% to Rs 4,122 crore from Rs 3,837 crore in the year-ago quarter, the company said on Thursday. The profit growth was sluggish considering the 20% plus growth RIL recorded in many preceding quarters. But analysts said the firm did much better than expected, since swinging crude prices had hit gross refining margins (GRMs) of oil companies worldwide. Analysts had expected a profit growth of 2% or less, or even a degrowth. But RIL maintained its GRMs at $13.4 per barrel, better than most estimates.

Net turnover was up 40% for the quarter, from Rs 32,043 crore to Rs 44,787 crore. RIL shares slumped 7.6% on the Bombay Stock Exchange on Thursday to close at Rs 1,215.25.

But Deepak Pareek, an analyst with Angel Broking, said, ?The results bettered our expectations. Better-than-anticipated GRMs have helped the company ensure some growth this quarter.? Growth in product prices also contributed to revenue growth.

Despite good GRMs, analysts blamed poor profits on the company?s lacklustre performance in petrochemicals, where its Ebidta was lower by 6.3% and margins by 3.4%.

RIL?s earnings per share (EPS) for the quarter stood at Rs 28.4, compared to Rs 26.4 in the year-ago period.

Mukesh Ambani, chairman & managing director, said leading economies are facing some ?unprecedented challenges? and that the company is preparing to meet the challenges arising out of it.

He said RIL will soon emerge as a key hydrocarbons major with production of oil from the K-G basin. ?We are at the final leg of capital expenditure in our key businesses and will see cash flows from these investments in the following quarters,? he said. RIL started oil production from the K-G D6 basin and now produces 10,000 barrels per day.

Exports of manufactured products for the quarter were up 51% at Rs 29,823 crore.

RIL?s operating margins fell by 358.63 basis points to 14.46% last quarter from a year ago. Interest cost rose 70.04% to Rs 437 crore, and depreciation cost rose 11.96% to Rs 1,264 crore. RIL said it had revalued its plants, equipment and buildings at Patalganga, Hazira, Naroda and Jamnagar in earlier years. ?Consequent to the revaluation, there is an additional charge for depreciation of Rs 798 crore for the half-year ended Sep. 30, 2008. This has no impact on the profit for the period,? it said.