Oil refining to retail and telecom conglomerate Reliance Industries Ltd is expected to report double-digit growth in consolidated net profit and revenue for the quarter ended September 30, according to a Moneycontrol poll.
The company is likely to report a 12 percent on-year increase in consolidated net profit to Rs 15,263 crore in the September quarter, according to the average of estimates by six securities firms.
The company will report its September quarter earnings on October 21.
Profit will be driven by strong consolidated revenue, which is expected to rise 34 percent on year on year to Rs 2.25 lakh crore in the quarter.
Revenue will be aided by strength in the energy business, which will benefit from better gross refining margins and strong demand compared to the year-ago quarter.
A robust performance by the telecom and retail business, in particular, will boost on-year revenue.
The retail business should have benefited from strong footfalls and demand compared to the year-ago quarter, when the business was affected by the COVID-19 pandemic.
Full reopening of the economy in the quarter gone by, along with strong festive demand, should have helped the retail business deliver strong sales growth.
Energy business
While the year-on-year performance of RIL’s oil-to-chemical vertical will be strong, its sequential growth could have been soft due to a decline in global gross refining margins from their lifetime highs in the June quarter as well as the imposition of additional duties on the export of refining products imposed by the government.
“Energy markets have been volatile in the past quarter, and windfall taxes added to challenges,” Morgan Stanley, which has an ‘overweight’ rating on RIL, wrote in a preview on the earnings.
Morgan Stanley said RIL’s earnings may have fallen sequentially as the oil-to-chemicals business was affected by refinery shutdowns, the windfall fuel export tax, and lower product cracks.
Singapore’s Gross Refining Margin (GRM), a key benchmark to gauge refining margins in Asia, plummeted 51 percent sequentially to $9.1 per barrel in the September quarter because of a decline in gasoline and fuel oil cracks.
The sharp decline in the Singapore GRM will have an impact on RIL’s margin, but continued strength in middle distillate products like diesel and air turbine fuel should have offset some of the impact, analysts said.
Retail and telecom
Analysts expect no surprises in the earnings performance of Reliance Retail and Reliance Jio Infocomm in the September quarter. On a sequential basis, both verticals are expected to have performed well, driven by high customer acquisitions in telecom and strong footfalls in retail.
IIFL Securities sees the retail segment registering 36 percent on-year growth in sales and a 7.5 percent core margin in the September quarter.
On the telecom side, acquisition of new customers and recent tariff hikes should result in 3-5 percent sequential growth in revenue.
Analysts expect the Average Revenue Per User (ARPU) of Reliance Jio to rise 1.9 percent on a quarter-on-quarter basis from Rs 176 reported in the previous quarter.
Jio is estimated to have added more than 9 million net new users in the September quarter, analysts said.
“Sequential ARPU improvement is backed by residual impact of the past tariff hike (higher proportion of longer-dated plans),” Emkay Global Financial Services said.
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