India's Reliance may see up to 40% surge in Q4 profit - analysts

21 April 2010 09:57  [Source: ICIS news]

MUMBAI (ICIS news)--India’s Reliance Industries may see a 35-40% year-on-year increase in its fourth-quarter-to March 2010 net profit on the back of higher gas output and a recovery in refining margins, analysts said on Wednesday.

"The company will generate cash flow from investments it has made in projects in India like its gas fields, and the refining margins are also quite good, so expectations of the quarter are good," said Deepak Pareek, an analyst with Mumbai-based Angel Securities.

The company's petrochemical business, meanwhile, might show tepid results, said an analyst with an international investment bank, who declined to be named.

"The petrochemical segment may not perform as well as the refining and gas segments. The market has not been very strong," the analyst said, describing that the polypropylene market as "subdued" during the quarter.

Reliance's financial year starts in April and ends in March of the following year. The company is expected to announce its fourth- quarter results on 23 April.

The company would benefit from its association with US-based Atlas Energy, which would help it expand and diversify into the American market, said Pareek of Angel Securities.

The deal with Atlas, which involves a $1.7bn (€1.3bn) investment in a joint venture, followed two failed attempts by Reliance to acquire overseas firms.

Reliance has plans to scale up the investment in the Atlast joint venture to $3.5bn over the next 10 years.

Most analysts said they expect Reliance to pursue more overseas deals to strengthen its position as a global player.

"Reliance is trying to grow its international presence and is looking for new markets to expand its businesses," the analyst with the international bank said.

($1 = €0.74)

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By: Priya Jestin

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