Reliance Industries Q3 Preview: Profit, Revenue Seen Rising, Operating Numbers Could Fall

Reliance Industries Ltd.'s third-quarter revenue and profit are likely to rise sequentially due to strong performance in the telecom and retail segments, despite stress in the oil-to-chemicals segment.

The company's consolidated net profit may rise 4% sequentially to Rs 18,080 crore for the quarter ended December 2023, according to the consensus of analysts' estimates tracked by Bloomberg.

The consolidated revenue of India's largest company by market value may rise 8.5% sequentially to Rs 2.54 lakh crore on higher sales in the retail, telecommunications, and oil and gas segments.

However, the company's operating profit—or earnings before interest, tax, depreciation, and amortisation—is projected to dip marginally or 1.3% sequentially to Rs 40,413 crore.

The operating margin is seen to be lower by 176 basis points at 15.9% on lower gross refining margins.

“We expect the consolidated Ebitda to decline around 2% QoQ (+13% YoY)," Kotak Institutional Equities said in a report. "With weak refining/petrochemicals, flat E&P (lower HPHT price offset by lower costs), we expect standalone Ebitda to decline 9% QoQ (up 16% YoY),” it said.

Oil-To-Chemicals

The oil-to-chemicals segment is likely to report a lower operating profit number on the back of weak refining margins and flat-to-marginally higher petrochemical margins.

The O2C Ebitda will be impacted by weak gross refining margins that were down 43% sequentially and 14% year-on-year, Nuvama Securities said in a report. Petchem margins were also down during the quarter on lower demand, although they were offset by a dip in ethane prices, it said.

"As per our calculations, Reliance’s GRM in Q2 FY24 was at $9.9/barrel, which is down to $7.9 in Q3 FY24. Petrochemical margins are expected to be at $193/tonne (blended basis) in Q3 FY24, up from $191 in Q2 FY24," a  JP Morgan report said.

Reliance Jio

RJio is likely to report strong numbers, led by higher subscriber additions and improved average revenue per user.

“We expect (RJio) Ebitda to rise around 4% sequentially (14% year-on-year), driven by around 12 million net subscriber adds and a marginal ARPU uptick to around Rs 183 versus Rs 182 QoQ," Kotak Institutional Equities said in a report.

Retail

The retail segment's revenue and operating numbers are likely to be boosted on account of higher footfalls, as the third quarter was a season of festivities. The numbers will be backed by strong operational leverage as well.

“As has been the case in the last couple of quarters, retail would continue to report strong growth (revenue/Ebitda growth estimated at 29%/36% YoY, aided by festivities in Q3 and margins expansion," JPMorgan said in a report.