Reliance Q2 net profit seen rising 26 per cent

By siliconindia staff writer   |   Friday, 22 October 2004, 07:00 Hrs
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MUMBAI: Reliance Industries Ltd, India's top petrochemicals maker and a refiner, is forecast to report a 26 per cent rise in quarterly profit, driven by strong petrochemicals prices and a surge in refining margins.

Reliance -- India's second-most-valuable company, with interests spanning from telecoms and power generation to textiles and gas discovery -- would have benefitted from a doubling of gross refinery margins in Asia, analysts said.

"For the first time in the history of the company, both refining and petrochemical cycles are firing in tandem," Vartharajan S, an industry analyst with brokerage Motilal Oswal Securities Ltd, wrote in a pre-earnings report.

"We expect the upswing to sustain for at least 18 months."

Analysts say average gross refining margins in the past three months stood at $6.60 per barrel, up 112 per cent on a year ago.

Refining generates about 60 per cent of Reliance's turnover from fully owned businesses, while petrochemicals bring in 38 per cent. Refinery throughput is expected to have grown by about 13 per cent on the previous year, due to increased industrial activity in Asia's fourth-biggest economy.

A Reuters poll of 10 brokerages predicted Reliance's net profit in its fiscal second quarter would rise 26 per cent on last year to a median Rs 15.93 billion ($348 million). That would represent a rise of 11 per cent from the previous three months.

Net sales are forecast to have grown 24 per cent to Rs 157 billion. Reliance releases its results on October 25.

The company, founded by Dhirubhai Ambani in 1958 to trade in synthetic yarn, has grown into a fully integrated oil products group that dominates the domestic petrochemicals market.

It acquired a stake in Indian Petrochemicals Corporation Ltd over two years ago, and an associated firm earlier this year bought the petrochemicals and plastics unit of National Organic Chemicals Industries Ltd.

IPCL, in which Reliance owns 46 per cent, reported this week a 156 per cent leap in quarterly earnings to Rs 1.38 billion.

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