Reliance Industries’ (RIL) 3QFY12 PAT of Rs44.4bn was down 14% yoy, in line with expectations but below Bloomberg consensus of Rs47.4bn
While 3Q results were adversely impacted by weak refining margins in the region, we believe refining margins should improve going forward in 2012 as gasoline/naphtha cracks recover.
Buy-Back an Eyewash - Ambani Sr to Jr have a history of protecting their Share Price during such adverse quarterly results and hence this move is nothing new for investors who have seen the moves of Ambani family. During the previous buyback in 2004, the company bought shares worth only 0.5% of their net worth though they announced a plan to buy back 10% of their net worth.
Shares buy-back will be part of utilizing part of RIL’s cash balance of about US$14bn, as the company is still considering its next driver of growth. We would have been more happy had RIL made bigger and stronger commitments to Retail and its new found love Telecom business rather than trying to boost stock price in near term, which is useless.
