UPDATE 2-India’s Reliance Q4 net misses f’cast as refining drags

* Q4 net profit 47.1 bln rupees vs mkt forecast 51.9 bln

* Profit rises for 2nd straight qtr on higher gas production

* Refining margins at $7.5/barrel vs $9.9/barrel last year

* Evaluating other shale gas JV opportunities- CFO

(Adds fund manager comment, details, background)

By Pratish Narayanan

MUMBAI, April 23 (BestGrowthStock) – Energy major Reliance
Industries (RELI.BO: ) posted a 30 percent rise in quarterly
profit, missing forecasts, and said it is on the lookout for
more shale gas joint ventures as it builds up its overseas
operations.

Lower-than-expected refining margins offset gains from
higher gas output for Reliance, India’s biggest listed firm with
a market value of about $78 billion.

The company said the market’s margin expectations had been
unrealistic, and that gross refining margins should be better in
the 2010/11 financial year than in 2009/10. Analysts expect
margins to rise as the global economy recovers.

“I think they (analysts) expected just too much in terms of
refining margins,” Reliance’s chief financial officer, Alok
Agarwal, told reporters,

Reliance, with interests in petrochemicals, refining, oil
and gas exploration, and retail, posted January-March net profit
of 47.1 billion rupees ($1.1 billion) versus 36.3 billion rupees
a year earlier. Year-ago results were restated to include
figures from Reliance Petroleum, which it absorbed last year.

Margins at Reliance’s flagship refining business stood at
$7.5 a barrel for the quarter, but lagged market estimates of
$8.3 a barrel.

“Except for the GRMs (gross refining margins), there is no
disappointment with the results. If GRMs are weak again next
quarter, only then we may have to review,” said Deven Choksey,
chief executive of KR Choksey Shares & Securities.

A Reuters poll had forecast quarterly net profit of 51.9
billion rupees. [ID:nSGE63I0FU]

FOREIGN PLAY

The company, which recently said it would pay $1.7 billion
to form a joint venture with Atlas Energy (ATLS.O: ) at one of the
most promising natural gas deposit regions in the United States,
was evaluating further such opportunities in shale gas, Agarwal
said. [ID:nN09123890]

India’s largest listed conglomerate, controlled by
billionaire Mukesh Ambani, has been scouting for acquisitions
overseas, and progress on that front will determine its outlook.

“We continue to seek growth opportunities within India and
globally to accelerate further value creation,” Ambani said in a
statement.

The outcome of a long-running gas dispute with Reliance
Natural (RENR.BO: ), led by Mukesh’s younger brother Anil, will
also have a bearing on the company’s outlook. [ID:nBOM489932]

Reliance is unable to hit peak gas production of 80 million
standard cubic metres a day (mmscmd) at its D6 block in the vast
Krishna Godavari basin in the Bay of Bengal due to customers not
buying allocated volumes, and a lack of pipelines.
[ID:nSGE6350I1]

But analysts say current production of 60 mmscmd is still
enough to boost results. Reliance began pumping gas from the
block in April last year.

Shares in Reliance have dropped 8 percent in the past two
weeks, while the broader Mumbai market (.BSESN: ) is down 2.6
percent.

Stock Market Advice

(Writing by Prashant Mehra; Editing by Tony Munroe and Jon
Loades-Carter)
(US$1=44.46 rupees)

UPDATE 2-India’s Reliance Q4 net misses f’cast as refining drags