Sunday, April 25, 2010

Analysts’ views on Reliance Q4 earnings

What is your initial reaction on Reliance Q4 earnings? What would have gone wrong because the GRMs are at $7.5? I was looking at the segmental results as well, I believe refining has not performed as per expectations.



Sushil Choksey: I do not have the break-up of the segmental profit but 4710 crores is at the lower end of the estimate where street was estimating. The common consensus was 5000, that's fine but you need to watch out is the interest higher or depreciation higher or tax is higher. The key may be in depreciation or tax. So if EBITDA higher than 9400-9500 crores, that needs to be watched out and I would look at the segmental profit before I give a reaction. But 5% +/- on Reliance number, which is Rs 50 EPS stock. The marginal small impact can be here depending on the sentiment.



The estimates were anywhere between Rs. 2200-2300 in terms of an EBIT for the refining business and the EBIT of the refining business has come in sub-2000. Do you think that has probably got a hand to play as well?



Depreciation definitely has got because last time around it was somewhere close to 1500 crores and this time around, we are close to roundabout 3400 crores on the depreciation front. So yes, that's where you felt the impact. It is a commodity company and you do not have to forget that. Commodity prices does play an important role in the profitability of a huge company like Reliance. So yes, it is below expectation there is no doubt about it but one definitely looks at from a long-term point of view, then yes, your petrochemical margins and of course the gross refining margins could better going forward from hereon.





How do you think the stock reacts now Monday morning?



Gaurang Shah: A little bit of gap down definitely not pulled out, a knee-jerk reaction of course just because of the GRMs that was possibly a downtick and of course a bit of concern on the depreciation front. Rest of the other items are the same what you have seen last year around. So in case if you are thinking from a medium to long term dip on Monday morning, I would definitely be a buyer.



What is your initial take, GRMs, the net profit and the segmental results, what do you make of it? What has gone wrong here, if indeed anything has gone wrong as per your estimates?



Deepak Pareek: What has happened is the numbers are slightly below our estimates and largely the factor driving the slightly weaker performance is the lower than expected GRMs. We were expecting GRMs at around $8.5 while the GRMs have turned out to be around $7.5. So that is a clear delta between the actual performance and the expectations.


News From: http://www.7StarNews.com

No comments:

 
eXTReMe Tracker