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A very healthy quarter from Reliance Industries: SMC Global

Reliance results for the quarter ended 30th September 2013 have clearly surpassed the estimates. The future quarters profitability will depend largely on the improvement of Gross Refining Margins, deployment of cash and KG-D6 basin gas production volumes revival: SMC Global.

October 14, 2013 / 08:14 PM IST
 
 
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By Jagannadham Thunuguntla,
Strategist & Head of Research, SMC Global Securities Limited


1. Reliance Industries results for the quarter ended 30th September 2013 have clearly surpassed the estimates.


2. The petchem margins at 10.05 percent is a clear positive surprise which had influential positive impact on the overall results. Even though GRMs (Gross Refining Margins) are subdued, the petchem margins have significantly outperformed.


3. Other key aspect of the results for this quarter is that the contribution of the core business to overall profitability is significantly higher. In the earlier quarters, the "Other Income" component has played significant role in the determination of the overall profitability.


4. For instance, in the quarter ended 30th June 2013, the contribution of "Other Income" to profit before tax is about 38 percent. However, in the current quarter ended 30th September 2013, the contribution of "Other Income" to profit before tax has reduced to 30 percent.


5. This is an encouraging sign as the core business has started to contribute more to profitability.


6. Overall, this has proved to be a very healthy quarter from Reliance.


7. The future quarters profitability will depend largely on the improvement of Gross Refining Margins, deployment of cash and KG-D6 basin gas production volumes revival.

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