Reliance Industries Q1 results preview: Net profit to rise, helped by better refining margins, Jio, Retail

RIL, the biggest private listed company in the country is expected to post strong growth in net profits in the April-June quarter.

RIL results
Shares of Reliance Industries are up 3.6% so far this year. (Image: REUTERS)

Mukesh Ambani’s Reliance Industries ltd (RIL) is expected to have continued its robust growth in the April-June quarter, this time helped by stronger refining profitability, better telecom ARPU, and growth in the retail segment. Domestic brokerage firms across Dalal Street have pinned net profit targets for the conglomerate in the range of Rs 23000-27909 crore, which would see RIL at least double its profits from the year-ago period. Reliance Industries will announce its fiscal first-quarter results on Friday, July 22. Shares of Reliance Industries are up 3.6% so far this year to now trade at Rs 2,490 per share.

EBITDA to rise

Reliance Industries’ Earnings before Interest, Taxes, Depreciation, and Amortisation (EBITDA) is expected to rise in the fiscal first quarter. Analysts at JM Financial said that the up-move will be caused by a sharp jump in refining margin (to ~$22/bbl) even though petchem margins remained weak. Motilal Oswal said RIL’s EBITDA will increase more than 81% on year fueled by growth in O2C, Jio and Retail segments. The brokerage firm projects an EBITDA growth of 123% on-year for the O2C segment, 27% gain for Reliance Jio, and 112% jump in Retail segment EBITDA.

ICICI Direct has estimated a whopping 107% growth in EBITDA, mainly led by the O2C segment. Further, ICICI Direct expects EBITDA Margins to be 30 basis points lower. Similar views are held by analysts at Emkay Global. However, Motilal Oswal and JM Financial expect EBITDA margins to be better.

Net profit projections

The biggest private listed company in the country is expected to post strong growth in net profits in the April-June quarter. Most analysts expect Reliance Industries to double its net profit. Last year in the April-June quarter, RIL had reported a net profit of roughly 12,300 crore. The growth in profits will be led by the traditional cash cow — the oil-to-chemical segment, joined by the new behemoths Retail and Jio.

Retail and Jio to continue on growth trajectory

Motilal Oswal said that they expect Reliance Jio to post monthly subscriber additions of 4 million in the first quarter of the fiscal year. “Expect EBITDA margin to improve marginally to 50.7% in 1QFY23. ARPU to grow 3% sequentially to Rs 173,” analysts at Motilal Oswal said. Jio’s profit expectations are set at Rs 4500 crore. JM Financial also expects strong growth in ARPU to Rs 174 with a net subscriber addition of 4.5 million. ICICI Direct expects 6 million subscribers added in the first quarter with APRU of Rs 174. Jio had an APRU of Rs 168 last quarter. 

The retail unit of RIL is projected to post 9% on-quarter growth to Rs 4,100 crore, according to JM Financial. Emkay Global sees the same increasing to 8%. 

EBITDA, Net profit projections

ICICI Direct-
EBITDA: Rs 47,108 crore
Net profit: Rs 27,909 crore

Emkay Global-
EBITDA: Rs 42,166 crore
Net profit: Rs 25,504 crore

Yes Securities- 
EBITDA: Rs 44,318 crore
Net profit: Rs 28,891 crore

Motilal Oswal
EBITDA: Rs 42,400 crore
Net profit: Rs 24,400 crore

JM Financial
EBITDA: Rs 41,796 crore
Net profit: Rs 22,494 crore

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