Reliance Industries staged a recovery on Thursday after a sharp post-Q4 results setback on Wednesday.
The scrip of the petrochemicals and refinery major was up by 1.5% at Rs 274.75 on the BSE in afternoon trades. It hit a high of Rs 276.70 earlier in the session. A good volume of 1.93 million shares was recorded on the counter. The scrip lost 2.4% at Rs 270.60 on Wednesday after the company's Q4 results. The disappointment pertained to pressure on margins in the company's key business of petrochemicals.
The Reliance Industries scrip has remained relatively firm on the bourses in the last few months, moving in a band of Rs 270-300. The stock was re-rated upwards from a late October 2002 low of Rs 219.30 following RIL's announcement of a mega gas find in the Krishna-Godavari basin of Andhra Pradesh.
The stock found support today after RIL said (along with the announcement of Q4 results on Wednesday) that it has raised the estimated gas find in the AP basin to 14.5 trillion cubic feet from its earlier estimate of 10.5 trillion cubic feet.
The oil and gas division presently contributes less than 1% of RIL's revenues, but the company expects its share in the overall business portfolio to increase significantly in the next 3 to 4 years, when production from the newly discovered gas fields is likely to commence.
For Q4 ended 31 March 2003, RIL posted a 31.8% jump in net profit to Rs 1,101 crore (Rs 11.01 billion) as compared to Rs 835 crore (Rs 8.35 billion) in the corresponding period last year. The rise in net profit exceeded analysts' expectations. RIL's total income (net of excise) surged by 28% in Q4 to Rs 13,081 crore (Rs 130.81 billion) as compared to Rs 10,198 crore (Rs 101.98 billion). However, the major push to the bottom line in Q4 came from the deferred tax write-back of Rs 15 crore as against a provision of Rs 280 crore (Rs 2.8 billion) in the corresponding period last year, disappointing investors.
The further disappointment came in the form of sharp fall in its operating margin in the company's key business of petrochemicals. The fall in margin was largely due to the rising raw material costs.
Meanwhile, in the refinery business, RIL said that it proposes to set up 1,500 retail outlets at an investment of Rs 3,000 crore (Rs 30 billion) in FY 2004. Group company, Reliance Petroleum, was merged with RIL effective from 1 April 2001, and following the merger, refining is another major contributor to RIL's revenues after petrochemicals. RIL has also bid for acquiring the 34% government stake in HPCL.
For FY 2002-03, RIL has declared a liberal dividend of 50%.
BSE code: 500325
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