Five factors why Reliance Industries stock fell today after reporting highest ever net profit in Q2

The Reliance Industries stock closed lower in trade today even after the Mukesh Ambani-led firm posted its highest ever net profit at Rs 9,516 crore in Q2 FY 19, up 17.35 per cent compared to Rs 8,109 crore, in the same period of the previous financial year.

The stock closed 4.11% or 47.25 points lower at 1101.65 on the BSE. The stock opened at Rs 1103.90 (a loss of 3.92%) and hit an intra day low of 1073.15 (6.59%) on the BSE. It closed at 1148.90 on Wednesday. It has been losing for the last two days and has fallen 5.33% during the period.

It has gained 21.01% during the last one year and risen 19.61% since the beginning of this year.

Here's a look at why Reliance Industries stock fell in trade today.

Low GRMs

The firm's gross refining margins (GRMs) fell to a two-quarter low of $9.5 per barrel compared to $10.5 in the previous quarter and $12 in the July-September quarter last year.

Delay in key refining project

Some investors were concerned by the delay in its $5 billion petcoke gasifier project. A delay in the gasifier project served as an indication of the pressure on refining earnings in the forthcoming quarters, several analysts said. During an analyst meeting, the company admitted to the delay at its refinery located in the Western India. Analysts have been counting on the project upgrade, which could boost Reliance's gross refining margins from next quarter.

Continued capital expenditure

The company indicated continued capital expenditure in the ensuing quarters to roll out its ambitious fibre-to-the-home (FTTH) service under its telecom venture Jio. "A material improvement in credit metrics is still less likely as telco capex is likely to remain elevated," international broking firm JP Morgan said in a report.  

Refining and marketing business

Segment earnings before interest and tax fell 19.6% to Rs 5,322 crore compared to Rs 6,621 crore in the corresponding period of previous fiscal.

Oil and gas and exploration business

Revenue for the oil and gas segment fell by 12% to Rs 1,322 crore in Q2 compared to Rs 1,503 crore in the corresponding quarter of previous fiscal. EBIT at (Rs 480 crore in loss) was impacted by lower volumes due to natural decline. On year-on-year basis, domestic production fell 25.5% to 15.3 billions of cubic feet equivalent (Bcfe) and production in US shale operations declined by 31.4% to 23.8 Bcfe. KG -D6 gas production declined to 3.7 million metric standard cubic meter per day ( -33% YoY and -10 % QoQ).