RIL Q3 preview: Profit to be flat, sales likely to fall; GRM to improve sequentially

RIL Q3 preview: Profit to be flat, sales likely to fall; GRM to improve sequentially

NEW DELHI: Reliance Industries, the largest company in India by market capitalization, is likely to improve its earnings performance sequentially, but the numbers are expected to be subdued year-on-year when the company publishes its result on Friday.

The net sales for the December quarter is projected to drop 18-22 per cent YoY. Net profits for the oil-to-retail conglomerate is expected to increase up to 5 per cent, said analysts tracking the company.

Edelweiss in its oil & gas preview projected RIL’s consolidated Ebitda to dip 8.3 per cent YoY, but increase 8.3 per cent sequentially led by strong petchem margins. It sees gross refining margins (GRMs) at $5.8/bbl , which would be flat sequentially.

It sees an Ebitda rise of 34 per cent sequentially in the retail business due to higher footfalls amid the festive season and a 6 per cent sequential increase in Reliance Jio’ Ebitda. “RJio subscribers would increase to 416 million from 406 million currently, and Arpu to increase to Rs 148 from Rs 145,” it said.

The company in the September quarter reported a 15.05 per cent year-on-year (YoY) drop in consolidated net profit at Rs 9,567 crore. In December quarter, last year, RIL had registered a 13.5 per cent growth in third quarter consolidated profit at Rs 11,640 crore.

For Q3FY21, Emkay Global expects net profits to be at Rs 12,024 crore, while IDBI Capital pegs the bottomline at Rs 12,521.80 crore. Both expect EBIT margin expansion in the range of 200-500 basis points.

“We expect GRM to improve QoQ to $6.8/bbl in Q3FY21 versus$5.7 sequentially. Petchem EBIT margin may improve to 18.6 per cent versus 15.9 per cent YoY. We forecast its retail segment revenue to remain flattish YoY and improve by 10 per cent sequentially with an Ebitda margin of 5.5 per cent,” analysts at IDBI Capital said in a note. “Further, we expect Jio’s Arpu to improve by 3.4 per cent QoQ to Rs 150, while digital services revenue may increase 32 per cent on a YoY basis.”

Emkay Global expects sequential consolidated Ebitda to rise 11 per cent to Rs 21,000 crore on the back of a recovery in retail and O2C income.

“Refining should improve on higher volumes and some improvement in GRMs to $6 per barrel. Petchem should be driven by an 8 per cent QoQ rise in margins. Retail Ebitda is estimated at Rs 2,570 crore, up 28 per cent QoQ (down 6 per cent YoY). For Jio, we expect 75 lakh net subscriber additions and 2 per cent Arpu growth QoQ at Rs 147.90,” Emkay projected consolidated PAT, post Jio Platforms-Reliance Retail minority interest, to rise 26 per cent QoQ to Rs 12,000 crore.

Other income should rise while interest cost should fall 23 per cent QoQ due to deleveraging, it said.

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