Net profit for the December quarter fell to Rs.44.4 billion ($882 million), missing expectations as a sharp contraction in oil refining margins cut into earnings.

"The global nature of our business and weakness in economic conditions resulted in reduced earnings in the quarter, particularly in our refining and petrochemicals business," Chairman Mukesh Ambani said in a statement.

Refining margins were $6.8 a barrel, down from $10.1 a barrel last quarter.

Helped by interest on its huge cash reserves, quarterly revenues grew 40 percent to Rs.874.8 billion ($17.4 billion).

Shares in India's biggest company by market capitalization have taken a beating over the last year on falling oil and gas production and regulatory troubles.

The stock closed Friday at 793 rupees a share, down 26 percent from a 1,074 rupee a share high last January.

Reliance's board said the company would buy back up to 120 million shares at up to Rs.870 a share, a 10 percent premium over Friday's closing price, on the open market.

Analysts cautioned that Reliance is not obliged to actually make good on its share offer.

In December 2004, Reliance said it would buy back Rs.30 billion ($596 million) worth of shares. In fact, it spent just 5 percent of that, or Rs.1.5 billion, according to Kotak Institutional Equities.

Since then, India's stock market regulator has said companies should buy back at least 25 percent of their announced offer, but that recommendation does not have the force of law, said Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities in New Delhi.

"It is not a question of propping up shares, it's setting a bottom," he said. "The stock may not go below 650 because there is confidence the company will buy the stock itself."