Stock Review: Reliance Industries’ (RIL)

Reliance Industries' (RIL's) December 2010 quarter results, announced after the close of the market session on January 21, were driven by strong refining margins of $9 a barrel compared to $5.9 during the corresponding period a year ago. The rise in refining margins was complemented by increasing profitability in the petrochemical (petchem) segment. The company's net profit surged 28.14 per cent yearon-year to `5,136 crore, while net sales rose 5.16 per cent to 59,789 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) rose 22 per cent to `9,545 crore, with a 217-basis-point margin expansion.

Increasing volumes and higher polymer and polyester prices propelled the performance of the petrochemical segment, which reported a8.17 per cent jump in revenues to `15,962 crore. Polymer margins were boosted by high Asian demand, while polyester prices and margins increased with rising cotton prices. A Motilal Oswal reports suggests petchem production increased four per cent yearon-year to 5.6 million tonnes per annum, while prices of polyethylene and poly propylene increased 4.8 per cent and 5.1 per cent, respectively. Concerns regarding increasing capacities in West Asia were addressed by the management. It said increasing supplies were being taken care of by rising demand in India and China.