Refinery disappoints:
Reliance Industries Ltd. (RIL) posted its June 08, quarter results with PAT of Rs.4,110 crores against Rs.3,912 crores achieved in March 08 quarter. Historically, RIL presents its quarterly results comparing it with the comparable quarter of the previous year, which may present the distorted picture, due to dynamic nature of crude price movement and more especially, in this quarter, where prices have gone up by about 25%, on an average, over the immediately preceding quarter. So comparing the results on quarter on quarter basis, rather than year on year.Total income of the company for the quarter is placed at Rs.41,805 crores against Rs.37,575 crores of March 08 quarter, recording a growth of 11.26%. Due to sharp rise in crude price, realization ought to have improved at a similar ratio but lower growth implies that probably the company may have entered into forward contracts for its finished products of Refinery.
EBIT rose to Rs.5,196 crores against Rs.4,927 crores registering a growth of 5.45% while PBT is placed at Rs.4,902 crores against Rs.4,655 crores, recording a growth of 5.31%. PAT is placed at Rs.4,110 crores against Rs.3,912 crores, recording a growth of 5.06%. EPS also improved by 5.06% from Rs.26.91 to Rs.28.27 for the quarter.It seems that the results of the quarter were presented with caution without incorporating the inventory gain as also better gross refining margins, on the fear of attracting attention of the government to compel them to present a case to levy Windfall Profit Tax.
RIL would commence gas production from KG – D6 Block by October 08, but expeditious settlement of RNRL claim needs to be done by RIL.
With an EPS of Rs.28.27 for the quarter, FY 09 EPS from existing business is estimated to be Rs.120. With Reliance Petroleum likely to commence trial by October 08 and commercial production by December 08, would have 4th quarter of full working. Similarly, K G Basin would start gas production from October 08, maybe with 25 MMSCMD which would rise to 40 MMSCMD to 80 MMSCMD by December 08 and March 09. So, both this business, with RIL having 70% interest in Reliance Petroleum Refinery and 90% interest in K G Basin Gas Block may give an additional EPS of Rs.30. With this, EPS of FY 09 can expected to be Rs.150. However, the same could be close to Rs.240 for FY 10 due to full working benefits available to RIL from RPL Refinery and K G Basin Gas production which is eventually likely to rise to 120 MMSCMD.