Reliance Industries ruled firm on Monday, following sustained buying support from institutions.
The scrip of the petrochemicals maker and oil refining giant was up by 1.82% to Rs 280.30 on the BSE by 12:55 IST. A volume of over 1.1 shares was recorded on the counter.
As per market buzz, DSP Merrill-Lynch was an active buyer on the counter.
Dealers said the buying support was mainly due to impressive third quarter performance of the company. On Friday (31 January 2003), Reliance Industries announced its Q3 results (ended 31 December 2002). The company registered a 24% rise in net profit to Rs 1,083 crore (Rs 10.83 billion), compared to Rs 873 crore (Rs 8.73 billion) in the corresponding period of the previous year. Total income increased by 7.58% to Rs 11,243 crore (Rs 112.43 billion) from Rs 10,450 crore (Rs 104.5 billion) in DQ 2001.
The 24% rise in net profit has beaten a capitalmarket.com poll (of three analysts) which estimated net profit in the range of Rs 766-828 crore (Rs 7.66-8.28 billion). Sales were forecast at Rs 11,045-12,500 crore (Rs 110.45-125 billion).
The figures for the corresponding previous period have been restated to include the effect of the amalgamation of Reliance Petroleum with RIL with effect from 1 April 2001.
Analysts said the DQ 2002 results have been impressive, which is also the reason behind the buying support to the RIL scrip.
Meanwhile for the DQ 2002 quarter, operating margin improved from 16.1% to 17.8% because of which, operating profit was higher by 20% to Rs 2,142 crore (Rs 21.42 billion). The paid-up share capital of the company has increased by Rs 342 crore (Rs 3.42 billion) on allotment of equity shares on 23 October 2002 to the shareholders of erstwhile RPL.
Interest costs fell by 14% to Rs 401 crore (Rs 4.01 billion) and depreciation fell by 8% to Rs 657 crore (Rs 6.57 billion). Thus, profit before tax was up by a massive 40% to Rs 1,354 crore. Extra-ordinary income was nil in the current quarter against Rs 258 crore (Rs 2.58 billion) in the corresponding quarter of the previous year. Thus, PBT after EOI was up by 17% to Rs 1,354 crore (Rs 13.54 billion). As provision for current taxation rose by 41% to Rs 58 crore and deferred tax fell by 11% to Rs 213 crore (Rs 2.13 billion), profit after tax was higher by 24% to Rs 1,083 crore (Rs 10.83 billion).
The rise on the RIL counter was also attributed to reports that the company has raised its product prices of polymers and key fibre intermediates by 2.4% to 27% for February 2003.
It has raised the price of polyvinyl chloride to Rs 43.10 per kg from Rs 42.10 in January 2003, polypropylene to Rs 50.35 per kg from 48.35 and polyethylene to Rs 43.20 per kg from 41.20.
Monoethylene glycol will now cost Rs 39.50 per kg instead of Rs 31.10 and polyethylene terepthalate Rs 58.50 per kg instead of Rs 53.50. Prices of partially oriented yarn was raised to Rs 71.16 per kg from Rs 65.68, polyester staple fibre by Rs 4 to Rs 58.25 per kg and purified terephthalic acid by Rs 5 to Rs 37.50. The price of linear alkyl benzene has been retained at Rs 51.40 per kg.
RIL is basically a petrochemicals maker (the largest in the country) and a petroleum refiner (after it merged group company RPL with itself). The company has emerged as among the largest private sector players in the oil exploration segment as well.
Late October 2002, RIL said that its Krishna-Godavari basin (Andhra Pradesh) gas project will go on stream around mid-2004. The cost of development of the project may total $1.3 billion, it added.
Earlier, RIL had indicated gas reserves in the range of 7 trillion cubic feet, or 45 million standard cubic metres per day, in its new discovery off the country's eastern coast. However, later reports indicated that RIL's D-6 deepwater block in the KG basin may contain up to 15 tcf reserves of natural gas.
Recently, RIL's initiative in the oil and gas exploration segment received a further boost when it was awarded a new set of oil and gas blocks. Out of the 23 blocks put up by the government under the NELP-III, RIL, in consortium with Hardy Oil of UK, bagged nine blocks including seven of the nine prime deepwater blocks on offer.
The Centre has cleared the acquisition and RIL is likely to sign the production sharing contract agreement soon.
Meanwhile, on 28 December 2002, RIL launched mobile telephony services nationwide through Reliance Infocom, the day being the birthday of its founder late Dhirubhai Ambani. Reliance Infocomm, an arm of RIL, is expected to roll out basic telephony services in 17 states. It has already laid 40,000 km of optic fibre across the country to cover various facets of telecom services including basic, Internet and long distance telephony. Reliance Infocomm is expected to provide cheaper services. It is banking on a lower margin-high volume game. RIL has reportedly invested a huge sum in Reliance Infocomm.
Promoters' held 43.7%, stakes in RIL, while the public, domestic and foreign institutions held 15.3%, 13% and 26.4% respectively.
BSE Code: 500325