India's largest listed company, Reliance Industries Ltd , posted its highest ever quarterly profit on higher refining and petrochemical margins, but lagged market estimates.

Reliance said net profit rose 28 percent to 51.36 billion rupees ($1.13 billion) in the fiscal third quarter ended December 31, from 40.1 billion a year earlier.

Net sales rose to 597.9 billion rupees, from 568.6 billion a year earlier.

A Reuters poll of brokerages had forecast quarterly net profit of 52.6 billion rupees for Reliance, which operates the world's largest refinery complex in the western Indian state of Gujarat.

Robust demand growth in home markets and highly competitive assets enabled Reliance to have industry leading operating rates and margins, Chairman Mukesh Ambani said in a statement.

Mukesh Ambani, the world's fourth-richest man with a fortune of $29 billion according to Forbes magazine, ended a long and public fight with his billionaire brother Anil last year and made a dramatic return to the telecom business with a $1 billion acquisition of nationwide broadband wireless spectrum.

The company, which has traditionally focused on energy, has recently been investing in overseas shale gas assets and widening its businesses beyond petrochemicals, refining, oil and gas exploration, and retail.

Reliance is looking to expand its shale gas business and has outlined plans to spend $4 billion to $4.5 billion by 2014 on three shale gas joint ventures with U.S. firms.

Gross refining margins at Reliance's flagship refining business jumped in the third quarter to $9 per barrel, up from $5.90 per barrel a year earlier, and in line with market estimates.

The margins, a key measure of profitability, were boosted by the rising trend in crude oil prices, which rose 14 percent in the fiscal third quarter.

Shares in Reliance, valued at nearly $71 billion, fell 2.9 percent in 2010, underperforming a 17.4 percent gain in the main BSE index <.BSESN>. The stock rose 1.7 percent on Friday to 986.50 rupees, ahead of the earnings, in a weak Mumbai market..

($1=45.6 rupees)

( Additional reporting by Ploy Tenkate in BANGKOK; Editing by Jui Chakravorty)

India