Reliance Industries Ltd (RIL) shares gained as much as 3% in intra-day trade on Friday, i.e. 17 January, ahead of the announcement of earnings for the third quarter ended December (Q3) scheduled for later in the day after market hours.
Experts believe RIL’s consolidated revenue for the December quarter could be higher by 2-7% sequentially, but profit growth may be flat to moderately high as the effect of strong telecom and retail businesses could be offset by weaker petrochemical business. RIL’s petchem segment is seen under pressure due to reduced margins for the quarter ended December.
Notably, the refining and petrochemical businesses together contribute 60% to RIL’s operating income (earnings before interest, tax, depreciation and amortization).
Brokerages expect Q3 gross refining margins (GRM) at around $9-10 per barrel against $9.4 reported in the September quarter. Motilal Oswal expects GRM at around $9 a barrel, with a huge premium of $7.3 per barrel to Singapore GRM, while Kotak Institutional Equities expects the GRM at $10.5 a barrel.
Kotak Institutional Equities said RIL’s standalone Ebitda should increase sequentially due to higher refining margins of $10.5 a barrel and crude throughput, which would be partly offset by sharp moderation in overall petrochemical margins.
“Consolidated Ebitda will be further boosted by increase in contribution from (1) Jio (up Rs 900 crore QoQ) amid rising subscriber base and higher ARPUs and (2) retail segment amid sustained growth in revenues,” added Kotak Institutional Equities.
Another brokerage firm Edelweiss kept a positive stance on RIL’s telecom business Jio. “We expect Jio’s revenue to jump 12.6% QoQ bolstered by higher Jio Phone sales, recovery of IUC (interconnect usage charges) charges and price hikes,” it said.
At 2:56 pm, RIL shares were trading at Rs 1,583.80, up 3%, after hitting the day’s high of Rs 1,584.95. The stock has jumped nearly 40% in the last one year compared with an over 13% rise in the benchmark Nifty 50 index.
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