Reliance Jumps Most in 19 Months as Profit Beats Estimates

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  • Shares climb 5.3% as net surges at fastest pace in 9 quarters
  • Gross refining margins at $10.6/bbl, climb the most in 7 years

Reliance Industries Ltd.’s shares rose the most in more than 19 months after second-quarter profit at the operator of the world’s largest oil refining complex beat analysts’ estimates.

The stock rose 5.6 percent to 963.50 rupees, the largest advance since March 2014, at the close in Mumbai. Reliance was the best performer on the benchmark S&P BSE Sensex, which rose 0.6 percent, on Monday.

Net income increased 14 percent to 65.61 billion rupees ($1 billion) in the quarter to September from a year earlier, the Mumbai-based company said Friday. That beat the 58.4 billion-rupee average of 12 analyst estimates compiled by Bloomberg.

Billionaire Mukesh Ambani-controlled Reliance is benefiting from lower crude prices in the quarter, with Brent averaging about half of what it was a year ago. The refiner earned $10.6 for every barrel of crude it turned into fuels in the period, the highest in seven years. Gross refining margin was $8.3 a barrel a year earlier and $10.4 in the preceding three months.

The company may deliver a compounded annual earnings growth of 13 percent over the next three years beginning from financial year ended March on higher margins, according to Antique Stock Broking Ltd.

“We resume coverage on the company with a buy rating,” Nitin Tiwari, an analyst at Antique, said in a client note on Monday. “We base our earnings and ratings on Reliance’s ability to earn superior refining and polymer margin.”

The adjoining refineries at Jamnagar have a combined capacity of 1.24 million barrels a day and can process cheaper, lower grades of crude into high-value products. Brent oil, the global benchmark, averaged about $51 a barrel in the quarter.