Reliance Industries (RIL), which is scheduled to announce its Q2 earnings on October 14, is expected to post weak numbers due to a subdued growth in the refining and petchem businesses. The sharp telecom tariff hike is partly offset by a weakness in O2C (oil to chemical) segment and growth in the retail segment is expected to be resilient, analysts said.
“RIL may see a 5% consolidated Ebitda decline y-o-y due to a 31% standalone Ebitda decline (refining, petchem and E&P), partly offset by an Ebitda growth of 9% in retail and 10% in digital services (telecom),” said analysts at Elara Capital.
The gross refining margins (GRM) could come down sharply, they said. Its Q2 GRM may be $9/ barrel of crude oil (bbl) vs $19 in Q2FY24, they said.
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However, analysts at JM Financial expect RIL’s Q2 Ebitda to grow 2.5% q-o-q to Rs 39,700 crore due to a tariff-hike-led 9.4% q-o-q rise in digital Ebitda; though it is likely to be partly offset by a 3.9% q-o-q decline in the O2C segment due to lower refining and petchem margins.
They expect retail Ebitda to rise by just 0.6% q-o-q and E&P Ebitda by only 0.5% on the potential fall in O2C Ebitda by 3.9% to Rs 12,600 crore due to a drop in GRM to $7.2/bbl against an implied GRM of $7.7 in Q1FY25 due to lower diesel cracks while refining throughput could rise 1.6% q-o-q to 16.3 million tonne (MT).
Analysts see petchem margin declining q-o-q and E&P Ebitda growing 0.5% q-o-q to Rs 5,200 crore due to a largely flattish gas output and price; and retail Ebitda is likely to grow only by 0.6% q-o-q to Rs 5,700 crore due to the ongoing store rationalisation and impact of heavy rain.
Digital Ebitda, according to analysts, is expected to grow 9.4% q-o-q to Rs 16,400 crore on a 7% q-o-q rise in Arpu to Rs 194, led by a tariff hike and aided by upgrades and one additional day in the quarter.
“We estimate refining throughput at 17 MTPA and petchem performance to remain muted. Refining margins are also expected to remain subdued due to weak Singapore GRM,” analysts at PL capital said.
Jio is likely to show a steady performance on the back of the price hike undertaken by the telecom company (a 0.6% q-o-q subscriber growth and 7% q-o-q growth in Arpu), and the retail segment’s profitability should be resilient, say analysts.
From: financialexpress
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