Robust Q2-08 results estimated for RIL due to rising petrochemical margins

At Reliance Industries Ltd.'s second quarter results due on Thursday, analysts are optimistic about the company's performance. High petrochemical margins and the merger with Indian Petrochemicals Corporation (IPCL) are expected to lead to healthy profit for the company. IPCL, which was recently amalgamated with RIL, has among the highest operating margins among Indian petrochemical companies. Gross refining margins are ruling only marginally lower than the last quarter, because of the huge run-up in crude prices. In Q2-08, RIL is expected to post improved operating margins in both its refining as well as petrochemicals business. The GRMs are expected to hover above US$13 per barrel during Q2-08, marginally lower from the record high of US$15.4 reported in the June 2007 quarter, but substantially higher compared to US$9.1 reported in the September 2006 quarter. The improved pricing conditions as well as the amalgamation of IPCL will have a positive impact on the operating margins of the petrochemicals business. Refining and petrochemicals contributes to over 90% revenues of the company. Contribution from RIL's recent acquisitions, namely Hualon in Malaysia and GAPCO in Africa, is not likely to add much to the company during the current quarter. RIL's refinery at Jamnagar has been accorded an EOU status in April this year, however, the company is unlikely to witness any adverse impact of dollar depreciation mainly due to the natural hedge it enjoys towards import of crude oil.
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