RIL- Higher refining margin, telecom seen to drive earnings growth

Reliance Industries Ltd.’s net profit is seen to rise sequentially, aided by improved refining margin and telecom operations.

The refining-to-retail conglomerate controlled by Mukesh Ambani is likely to see its consolidated net profit (adjusted from extraordinary items) rise 33% over the previous quarter and 76% year-on-year to Rs 21,615.35 crore in the three months through June, according to an average of analyst estimates tracked by Bloomberg.

• Consolidated revenue of the nation’s biggest company by market value also is expected to increase 6.44% sequentially and 61% over the year earlier.
• Operating income — or earnings before interest, tax, depreciation and amortisation — is estimated to rise 22.6% sequentially and 39.5% year-on-year.

RIL is set to announce its June quarter results on Friday.

Oil-To-Chemicals
Refining margin of RIL’s oil-to-chemicals segment is expected to rise sequentially, aiding the segment’s EBIT.

That comes as Singapore gross refining margin surged to $25 a barrel in the April-June quarter from $17 a barrel in the previous three months, led by higher petrol and diesel cracks.

Operating profit from the upstream or exploration segment may also see an uptick, driven by an improvement in price realisation and stable production from the KG-D6 block.

O2C EBITDA is expected to grow 88% year-on-year to Rs 22,400 crore, primarily on higher transportation fuel cracks and crude throughput estimates of 19.4 million metric tonnes, up 0.5% sequentially.

Telecom
Reliance Jio Infocomm Ltd. is likely to benefit from higher tariffs. The segment revenue is expected to improve 9% sequentially and 27% year-on-year to Rs 22,800 crore, driven by higher average revenue per user.

ARPU is seen to rise 2% over the previous three months, and 24% year-on-year on higher tariffs. The company’s subscriber base stood at 40.5 crore in the first quarter, a decline of 50 lakh sequentially, as SIM consolidation continued.

Retail
Reliance Retail Ventures Ltd.’s operating margin is expected to narrow 45 basis points sequentially but expand 106 basis points over the year earlier to 6.8%.

Its net revenue is expected to grow 59% year-on-year to Rs 53,500 crore on higher store footprint and demand for grocery and fashion segments. Bloomberg