Brokerages expect Ebitda of Reliance Industries (RIL) to decline sequentially or remain flat due to weaker O2C (oil to chemical) earnings.
“On refining, we expect a sequential decline in our calculated net GRM (gross refining margins )to $9.0/bbl in Q4 driven by weaker Singapore refining product cracks and higher crude premiums, suppressing Asia refining margins,” Goldman Sachs said.
The international brokerage expects RIL’s Ebitda to come down sequentially due to weak O2C earnings. However, Goldman Sachs is bullish on RIL’s refining margins over the medium term as nearly 1.0 mn bpd of global refinery capacity is likely to close permanently through CY25, driving refining utilisation rates and refining margins to go back towards the upper end of historical levels.
On petchem, it sees a longer recovery trajectory for margins, especially for olefins and certain aromatics, due to unresolved supply and demand issues. “However, we expect RIL to continue outperforming industry margins, driven by a significant cost curve advantage versus naphtha-based peers, driven by low US ethane gas price,” it said.
JM Financial expects RIL’s Q4FY25 Ebitda to be up 0.7% QoQ due to slightly better GRM, higher crude throughput, and pass-through of the telecom tariff hike. “RIL’s Q4FY25 Ebitda is likely to be up 0.7% QoQ at Rs 44100 crore, led by 5% QoQ growth in O2C
Ebitda on account of a tad better GRM, higher crude throughput, slight recovery in petchem margins and 1.6% QoQ growth in digital Ebitda as the July’24 tariff hike continues to pass-through its ARPU,” JM Financial said. However, this Ebitda growth could be largely offset by a decline in retail business Ebitda, which it expects to be down 5% QoQ on a high base, but up 10.6% YoY and E&P business Ebitda down 5.8% QoQ on natural decline in KG D6 gas output, it said.
Emkay Research said RIL’s consolidated Ebitda is expected to be range-bound QoQ, mainly supported by O2C amid seasonally muted Retail.
” We estimate RIL’s consolidated Ebitda to be flat QoQ at Rs43700 crore with O2C up 4% to Rs15000 crore on better physical market premiums and marketing margins,” it said.
Goldman Sachs expect Q4FY25 retrail sales growth (ex-connectivity) of 6.5% YoY. “This is a continuation of the sequentially improving trend seen from -8.5% YoY in 2QFY25 to 5.7% YoY in3QFY25. We note that 4QFY25 sales growth is likely to have a slight drag for all companies because the quarter has one fewer day than 4QFY24” GS said .
The improving sales growth trend for Reliance Retail is driven by re-structuring of Grocery business largely behind (B2B business rationalization and streamlining of store portfolio through closures of low-profitability stores), and focus in fashion business on trendier designs and better value proposition (launch of new fast fashion formats like Yousta), it said. “ We expect a slight improvement in margins sequentially as we view restructuring as largely behind,” it said.