Reliance results beat expectations

New Delhi: India's Reliance Industries Ltd, owner of the world's third-biggest refinery, said first-quarter net income rose 13 per cent, beating analysts' estimates, after earning more from processing crude oil.

Profit climbed to Rs41.1 billion ($976 million), or Rs28.3 a share, in the three months to June 30, from Rs36.3 billion, or Rs25, a year earlier, Reliance said in an e-mailed statement yesterday.

The median estimate of 13 analysts surveyed by Bloomberg News was a profit of Rs40.5 billion.

Asian prices of diesel, Reliance's main export product, rose 35 per cent during the quarter, in line with crude oil, which rose to record levels, boosting the company's revenue.

Refining profits will help fund Chairman Mukesh Ambani's $11.3 billion investment plan to develop India's biggest natural gas discovery and complete a new refinery in western India.

"Refining has helped drive growth at Reliance and will continue to do so for the next couple of quarters till more refineries come on-stream globally next year," said Mahesh Patil, who helps manage the equivalent of $9 billion in assets at Birla Sun Life Asset Management Co. in Mumbai.

"The next growth cycle has to be from gas.''

The eastern India offshore gas field producing 44 per cent of India's current output and the 580,000 barrel-a-day refinery will add to earnings when they start this year. Reliance Industries stock has risen 21 per cent in the past year, valuing the company at about $80 billion.

The Mumbai-based company typically earns more from processing than Asian rivals because its 660,000 barrel-a-day western-India refinery, located two days away from oil fields in the Middle East, produces higher quality fuels from cheaper, low- grade oil. Crude oil prices rose 29 per cent this year, touching a record $147.27 a barrel on July 11.

Fuels accounted for 67 per cent of Reliance's export volumes in the year ended March, according to the company.