Reliance Industries Q1 Preview: Weak Gross Refining Margin To Hurt Profit, Revenue
Consolidated net profit for the period is expected to drop 12.6% year-on-year.
Reliance Industries Ltd.'s first quarter revenue and profit are likely to fall year-on-year on weak refining margins and the flat performance of the oil-to-chemicals segment during the period.
Consolidated net profit for the period is expected to drop 12.6% year-on-year, though it is expected to rise 3.3% sequentially to Rs 16,995.5 crore for the quarter ended June, according to an average of analyst estimates tracked by Bloomberg.
The consolidated revenue of India's largest company by market value is expected to decline 4.2% year-on-year and 5.1% sequentially to Rs 2.1 lakh crore.
The company's operating income—or earnings before interest, tax, depreciation, and amortisation—is projected to rise by 3.1% sequentially and 0.13% year-on-year to Rs 38,046.5 crore, according to research estimates tracked by Bloomberg.
RIL will declare its quarterly results on Friday.
In its report on RIL, Bank of America said it estimates a 10% YoY drop in PAT to Rs 16,160 crore and a 16% drop sequentially.
The consolidated revenue may fall 7% YoY and 4% sequentially to Rs 2.08 lakh crore, it said.
The oil-to-chemicals segment's earnings before interest and taxes are expected to fall 6% QoQ, mainly due to a weaker gross refining margin in the refinery business, offsetting benefits from cheaper Russian crude oil, a BofA report said.
Oil-To-Chemicals
Petrochemical Segments
Petchem EBIT is largely expected to be flat sequentially, given limited pricing power for the company.
Weak gross refining margin and flat petrochemical margin would lead to a drop in standalone revenue but would be offset by the benefits of fuel over-recoveries in the O2C segment, according to Kotak Securities Ltd.
Reliance Jio
Reliance Jio's operating income is expected to rise marginally on net subscriber additions and an increase in blended average revenue per user thanks to a higher subscriber mix.
Kotak Securities expects Reliance Jio's Ebitda to increase 3% sequentially, led by nine million net subscriber additions overall. The blended ARPU is expected to improve to Rs 181 on an improvement in the subscriber mix. Rising fibre-to-home contributions and higher days in the quarter have also helped.
Retail
The retail business is expected to report double-digit growth of 22% due to steady momentum in the business and continued uptake in the grocery and fashion businesses, BofA said.
Key Growth Factors For RIL
According to BOB Capital Markets, some of the key growth catalysts for RIL will be guidance on cost reduction, deployment of new energy in the O2C segment, and gains in market share and ARPU on the nationwide launch of 5G and Jio AirFibre.
Acceleration towards the three-times growth target over 3-5 years set at the FY21 AGM, demonstration of RIL’s comfort in sharing the granular performance for major retail verticals, the roadmap on the listing of Jio Financial Services Ltd., and the retail business are other factors, BOB Capital Markets said.
