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Reliance Q2 net up 26 percent
By siliconindia staff writer
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Thursday, 16 October 2003, 19:30 IST
MUMBAI: Reliance Industries, India's largest private sector company, reported on Thursday its quarterly profit rose 26 per cent, boosted by robust demand and higher profit margins in its core petrochemicals business.
Prices of Reliance's petrochemical products, which account for about 60 per cent of sales, rose up to 40 per cent in the past quarter. Polyesters used for textiles, polymers for plastic and chemicals for detergents became costlier.
Reliance, founded as a synthetic yarn trading shop in 1958 by Indian business luminary Dhirubhai Ambani with $325, booked a net profit of Rs 1,263 crore ($278.8 million) in the second quarter ended September 30. That compared with a profit of Rs 1,002 crore in the year-ago quarter. Net turnover rose 10.2 per cent to Rs 12,693 crore.
The results of Reliance, now India's most valuable company with a market value of $14.7 billion, beat market forecasts. A Reuters poll of 11 analysts had estimated Reliance's net profit at Rs 1220 crore on a 24 per cent sales gain to Rs 12,750 crore.
Reliance's stock price jumped as much as 3.6 per cent to Rs 497.45 after the result in a firm market. The Bombay index was up one percent at 4,904.07 points.
Gross turnover in the reporting period has gone up to Rs 18,036 crore from Rs 16,206 crore, said vice-chairman Anil Ambani.
Ambani said for the six months ended September 30, the company has reported a increase in net profit at Rs 2,367 crore as against Rs 1,920 crore.
In the first half, the gross turnover rose to Rs 35,202 crore from Rs 31,782 crore while net turnover recorded an increase from Rs 22,169 crore to Rs 25,194 crore, he said.
Exports were also up by 41 per cent at Rs 7,837 crore, he added.
"The results have surpassed estimates. I think, firm prices and strong demand for petrochemicals could have contributed to improved performance," said New Delhi-based K K Mittal, fund manager with Escorts Mutual Fund.
Petrochemical price hikes were driven by an uptick in global prices and by healthy demand from domestic consumers as Asia's third-largest economy staged a strong recovery.
Reliance extended its dominance over the petrochemicals industry after acquiring its main competitor, state-run Indian Petrochemicals Corporation Ltd last year.
Riding the strong upturn in the demand cycle, Reliance's shares have risen 61 per cent this year while the benchmark top-30 Bombay index has gained 44 per cent.
At that price the stock trades at a price earnings multiple of 16.4, based on the past year's earnings. The valuation is cheaper than Asian peers such as Formosa Plastics and Nan Ya Plastics , trading at PE multiples of 20.92 and 22.32.
(Source: Economic Times)