According to Moody’s Investors Service, the Mukesh Ambani-led Reliance Industries (RIL) refinery margins should continue to improve as it completes margin-enhancing projects on the petcoke gasification and refinery off gas cracker.
RIL saw a pre-tax profit growth of 2% during July-September, to which Moody’s commented: “Earnings improved despite a decline in the Singapore benchmark refining margin and decline in the petrochemical product spread […] We expect RIL’s margins will improve by at least US$2/bbl on completion of these projects”.
“Although RIL's refining margin only improved marginally compared to US$10.4/bbl during 1Q FY2016, it outperformed the Singapore refining benchmark that declined to US$6.3/bbl from US$8.0/bbl over the same period […] We expect petrochemical spreads to remain soft over the next 12 months in line with our expectation of a slowdown in growth in the global economy including India and China. However, as RIL rolls out its petrochemical expansion projects over the next 12-18 months, its production mix will improve, increasing the proportion of high-value chemicals with little to no incremental input costs. This should result in higher contribution from the petrochemical segment over the next 12 months," a note form Moody’s said.
Moody's added that upstream oil and gas segment earnings continued to decline as production levels and oil prices remain weak.
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