Reliance Surges as Profit Gains Most in Two Years: Mumbai Mover

Reliance Industries Ltd., India’s biggest company by market value, surged to the highest price in more than 19 months after third-quarter profit increased the most in two years.

The shares climbed 2.2 percent to 919.95 rupees in Mumbai trading, the highest since June 13, 2011. The stock has increased 9.6 percent this year, compared with a 3.5 percent gain in the benchmark Sensitive Index.

Reliance, controlled by billionaire Mukesh Ambani, reported a 24 percent increase in quarterly profit to 55 billion rupees ($1 billion) after earnings climbed from turning crude oil into gasoline and diesel, according to a Jan. 18 filing. Profit beat the 50.1 billion rupee median estimate of 25 analysts in a Bloomberg survey. Sales at the Mumbai-based explorer and refiner rose 10 percent to 938.9 billion rupees.

“The guidance for Reliance is positive as demand picks up with economies including China recovering,” said Niraj Mansingka, a Mumbai-based analyst with Edelweiss Securities Ltd., who has a buy rating on the shares.

Ambani, 55, is shifting focus back to processing crude as Reliance’s output from India’s largest natural gas block continues to wane. Economic recovery from the U.S. to China is expected to lift global demand for fuels that Reliance produces in the world’s biggest refining complex in western Gujarat state and sells overseas.

The company earned $9.6 for every barrel of crude it processed in the quarter, compared with $6.8 a year earlier and $9.5 a barrel in the previous three months.

Reliance, with cash and equivalents of 809.62 billion rupees and 722.66 billion rupees of debt outstanding as of Dec. 31, plans to spend more than $2 billion on Venezuelan oil fields, betting President Hugo Chavez’s failing health won’t lead to political upheaval, said a person with direct knowledge of the decision.

The company’s gas production from the KG-D6 block in the Bay of Bengal declined 37 percent to 275 billion cubic feet in the nine months ended Dec. 31 from a year earlier, Reliance said Jan. 18. The drop was because of reservoir complexity and a natural decline in output, it said.

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