India’s top petrochemicals maker and oil refiner, Reliance Industries Ltd, or RIL, is forecast to report on 24 July a modest 14% rise in quarterly net profit as its petrochemical business clips the pace of earnings growth despite strong refining margins.
Analysts expect RIL, India’s biggest private company with a market value of $73 billion (Rs3 trillion), to benefit further from robust refining margins and natural gas sales this year.
Oil and Natural Gas Corp. Ltd, India’s No. 1 oil producer, is expected to report on 28 July 13% growth in net profit. The state-run firm is bound by the government to sell oil at lower prices to state refiners.
Analysts highlighted risks for the sector as high oil prices could curtail demand.
“Future earnings of oil and gas companies are at risk due to risk to refining and petchem margins on account of demand destruction from high crude prices and uncertainty on subsidy sharing, especially if crude prices remain firm,” Amit Mishra, analyst at ICICI Securities, said in a note.
Reliance is, however, expected to get a boost and produce up to 80 million cubic metres of gas a day from its fields in the Krishna-Godavari (KG) basin off India’s east coast by September. “That would be significant. Gas sales should start chipping in significantly from the third quarter, boosting profitability,” said Rohit Nagraj, a oil and gas analyst at Angel Broking Ltd.
Reliance Petroleum Ltd, in which Chevron Corp. owns 5%, is expected to commission its 580,000 barrels per day refinery around September, adding to the company’s revenue and profit. Reliance Petroleum is 70.4% owned by RIL.
Net profit at RIL, controlled by Mukesh Ambani, is seen at Rs4140 crore in its fiscal first quarter ended June, up from Rs3,630 crore reported a year ago, a Reuters
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