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Jul 19, 2013, 07.24 PM IST | Source: CNBC-TV18

RIL earnings as expected; petchem needs to improve: Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18 that the Reliance's earnings for June quarter were in line with his expectations. However, petchem needs to improve if the market has to be happy with the company, he says.

SP Tulsian of sptulsian.com believes that the Reliance Industries' earnings for the June quarter were in line with his expectations. He was expecting close to Rs 5,390 crore for the quarter. Meanwhile, the company reported a 19 percent rise (year on year) to Rs 5,352 crore.

Tulsian told CNBC-TV18 that the petchem earnings reduced due to the lack of improvement in oil and gas sector. Their refining segment was also not performing well and there was not much capacity addition, he says. “So, I was not very bullish on petchem”, he adds.

But, he sees a recovery for petchem business, going forward. “But, if we see the same kind of slack performance, then market will really be disappointed”, adds Tulsian.  

Also read: Reliance Industries Q1 net up 19%, sales decline 4.5%

Below is the edited transcript of  his interview to CNBC-TV18.

Q: Does this surprise you that the petchem earnings before interest and tax (EBIT) has actually come in lower than the last time. You were expecting Rs 1,915 crore and in line with your numbers. Even you were expecting a close to Rs 5,390 crore of numbers. What is your first comment on these numbers?

A: I will take that numbers as very much what I have been expecting for the quarter. If you really see their three segments, we all know the fate of oil and gas; nothing is going to improve.

Even the refining segment is also not performing very well because when we saw the USD 10.1 per barrel as the gross refining margin (GRM) Q4 quarter, market was very jubilant because it has fallen to USD 8.4 per barrel. It is more than what was expected.

So yes, the petchem has to really catch on from hereon. Unless and until company to that - but for this particular quarter, I was not very bullish on petchem. There has not been much capacity addition. But they should have gained slightly better because of the currency gain.

If you really see the polymer and the polyester prices, they are always import parity prices type based. They are derived on that basis. So, I am hopeful that from hereon things should be contributed by petchem.

But, if we see the same kind of slack performance, then market will really be disappointed. One segment has to really take the lead and that can only happen with the petchem. If that continues to remain subdued then market may not really be too happy about that.

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