Reliance Industries Ltd posted its fourth consecutive drop in quarterly profit but met market estimates, as refining margins rebounded and treasury gains from its huge cash pile bolstered profits.
Reliance Industries, controlled by billionaire Mukesh Ambani, Asia's second-richest man, said its quarterly profit fell 5.7 percent from a year before to 53.76 billion rupees.
The results come as the company faces a slump in investor interest and a slowdown in its core energy business, while recent forays into consumer-focused segments, such as telecom and retail, are yet to garner profits.
Net sales for the September quarter rose 15 percent to 903.35 billion rupees.
"The numbers look slightly better. But I would hold off buying into the stock for the time being, until there is clarity on gas pricing," said Ambareesh Baliga, chief operating officer of Way2Wealth Securities in Mumbai.
A Reuters poll of banks and brokerages had forecast net profit of 53.9 billion rupees for the quarter ended September 30 on net sales of 933.4 billion.
Gas output at Reliance's main D6 block, off India's east coast, has shrunk and is projected to decline further to 20 million standard cubic metres a day (mscmd) in 2014/15, a third of the 60 mscmd it was producing in 2010.
Reliance and partner BP Plc have blamed a decline in pressure and water ingress for falling production, and have asked for an increase in gas prices to justify higher expenditure to develop the block, but the government remains unconvinced.
Reliance has said it aims to double operating profit in the next four to five years as it boosts spending and capacity in its core energy business and builds up its newer retail and telecoms operations.
The company, which operates the world's biggest refining complex in India, reported a gross refining margin of $9.5 a barrel for the quarter, compared with $10.1 a year earlier. It had posted a refining margin of $7.6 a barrel in the June quarter.
Refining margins have risen over the past quarter, helped by higher demand and unplanned refinery shutdowns in Asia. Analysts had expected Reliance to report a margin of around $9/barrel.
Profits from the refining segment, which accounts for nearly 80 percent of the company's revenue, rose 15 percent.
Reliance's petrochemicals business posted a 1 percent rise in revenue on higher demand and prices, but margins declined. The petchem business is likely to see growth from the first quarter of 2013, the company said.
Revenue for its oil and gas business fell 37 percent, mainly due to lower production at its main KG-D6 block.
Reliance held 791.6 billion rupees in cash reserves at the end of September, up from the $12.7 billion in the previous quarter. The company has seen its cash hoard multiply in the last two years, resulting in a disproportionate increase in profits from treasury operations.
Other income of 21.12 billion rupees, most of it through treasury gains, accounted for 31 percent of the company's pretax profit for the quarter.
Shares in Reliance, valued at $50.3 billion, have risen 18.8 percent so far this year, but still lag a 21 percent rise in the BSE Sensex.
Ahead of the results, the stock closed up 0.5 percent.