RIL's Q3 net profit expected to be down 11% YoY: Bank of America Merrill Lynch

MUMBAI: Bank of America Merrill Lynch expects Reliance Industries’ net profit for quarter ended December 2011 to be down 11 % YoY and 20% QoQ due to sharp decline in gross refining margins ( GRM).

“We estimate RIL’s 3Q FY12E net profit to be down 11% YoY and 20% QoQ at Rs 45.5 billion. RIL will be hit by sharp decline in GRM. RIL’s theoretical GRM for 3Q works out to US$ 5.9-6.9/bbl. Our 3Q net profit estimate of Rs 45.5 billion is based on GRM of US $6.5/bbl. We thus expect RIL’s 3Q GRM at US $6.5/bbl to be down 27% YoY and 35% QoQ.

RIL’s GRM would also be lower than Reuters’ Singapore GRM of US$7.9/bbl. RIL’s GRM is hit by fall in naphtha and LPG (23% of RIL’s product slate and just 10% of Reuters) cracks and of discount to Dubai of heavier crude RIL uses,” the report said.