Mukesh Ambani-led Reliance Industries is expected to post a mixed set of financial numbers for the third quarter October-December on Friday, January 20, with net profit likely falling, but EBITDA and revenue rising. Reliance Industries’ – Nifty index’s biggest heavyweight – profit after tax (PAT) for fiscal third quarter is likely to fall 5-18% on-year due to volatility in oil demand owing to geopolitical disruptions. Low petrochemical margins and windfall tax will weigh on margins further, according to analysts. On the flip side, the company’s EBITDA is expected to rise in double digits largely driven by strong ONG, retail and telecom divisions.
RIL to see steady improvement across segments
“RIL is likely to see a steady improvement across segments, with stronger base GRMs and relatively lower windfall tax to drive better OTC results. However, a ~15% dip in integrated petrochemical spreads will likely offset the refining boost to an extent. Jio is expected to deliver a 2% QoQ rise in EBITDA while retail too is likely to have sustained the momentum, with an estimated 4% jump in QoQ in segment EBITDA. Overall, we expect consolidated EBITDA to grow by 5% QoQ and PAT by 6% QoQ,” said brokerage firm ICICI Securities.
JIO’s EBITDA to increase due to residual benefits of lower SUC
“We expect RIL’s standalone EBITDA to improve 42% QoQ reflecting (1) elevated middle distillate cracks and improvement in petchem margins, (2) higher E&P profitability on gas price hike and (3) currency depreciation. We expect EBITDA for Jio to increase by 4% QoQ led by (1) residual benefits of lower Spectrum Usage Charge (SUC), (2) marginally higher ARPUs (Rs179 in 3Q versus Rs177 QoQ) and (3) 7 mn net adds. We expect the EBITDA of the retail business to increase by 11% QoQ and 34% YoY driven by increased store footprint, improvement in footfalls, and benefits of operating leverage,” said Kotak in its strategy report.
Dominant position in retail, telecom will continue to drive RIL’s profitability
“We cut FY23E earnings by 13% as we lower petrochemicals margins, due to Chinese demand volatility. We also increase finance charges for FY23-25E given continued exchange rate depreciation; FY25 EPS is cut by 3.5%. RIL remains well placed to benefit from strength in refining margins due to geopolitical disruptions along with higher gas profitability; volumes are to rise to 30mmscmd from ~19mmscmd in Q2FY23. Also, its dominant position in retail and telecom businesses will continue to drive RIL’s profitability,” said analysts at Prabhudas Lilladher.
Key things to watch from RIL Q3 results
Reliance’s telecom arm JIO’s performance
Movement in petchem margins
Profitability due to gas price hike
Impact of currency depreciation
Reliance Industries Ltd (RIL) Q3 earnings estimates
ICICI Securities
Revenue – Rs 2,43,000 crore, 31% YoY
EBITDA – Rs 32,900 crore, 11% YoY
PAT- Rs 16,400 crore, (-7%) YoY
Kotak Institutional Equities
Net Sales – Rs 2,25,063.1 crore, 21.6% YoY
EBITDA – Rs 35,539.6 crore, 19.6% YoY
Reported PAT – Rs 17,098.3 crore, (-7.8%) YoY
Jefferies
EBITDA – Rs 33,204.3 crore, 12% YoY
Attributable PAT – Rs 15,214.9 crore, (-18%) YoY
Nuvama
Revenue – Rs 2,08,132.5 crore, 12.5% YoY
EBITDA – Rs 32,792.2 crore, 10.4% YoY
PAT – Rs 14,965.8 crore, (-4.8%) YoY