RIL Q3 results preview: Jio ARPU seen at Rs 149

Mukesh Ambani’s Reliance Industries Ltd is likely to see a rise in profit and revenues on the back of improvement in refining, petrochemicals and retail performance, when it reports its fiscal third quarter earnings on Friday. Analysts expect the oil-to-telecom conglomerate to post better numbers than the previous quarter. RIL is scheduled to release its October-December quarter results for the current fiscal on Friday, 21 January 2022, after market hours.

On Thursday, Reliance Industries Ltd (RIL) share price was trading nearly 2 per cent down at Rs 2,475 apiece, as BSE Sensex and Nifty 50 tumbled nearly 1 per cent so far in the trade. In the last one month, RIL share price has outperformed BSE Sensex, gaining nearly 9 per cent. In comparison, Sensex gained 7 per cent. Reliance Industries stock price soared over 18 per cent, while the 30-share index was up 14 per cent. On a year-to-date (YTD) basis, RIL has added 3.09 per cent while Sensex was up just half a per cent.

What to expect from RIL Q3FY22 results?
Hemang Jani, Head Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services, said that renewed focus on green energy and recent developments pertaining to acquisition and investment announcement into alternate energy have been viewed positively by markets, as Reliance Industries could emerge as a big player in this emerging theme with its balance sheet and execution capabilities. He added that RIL’s O2C and retail are likely to drive growth this quarter. Consolidated EBITDA is seen at Rs 300 billion (+39% YoY / +15% QoQ, primarily driven by growth in O2C, followed by Retail). “We expect O2C EBITDA at Rs 150 billion (+73% YoY / +21% QoQ), RJio EBITDA at Rs 95 billion (+17% YoY / +5% QoQ), and Retail EBITDA at Rs 36 billion (+41% YoY / +31% QoQ),” Hemang Jani told Financial Express Online.

Prabhudas Lilladher analysts noted that RIL’s earnings are likely to improve sequentially due to improved refining earnings. It added that RIL’s standalone earnings will grow 7 per cent sequentially, given higher refining profitability and higher gas realisation. “We factor in stable refining throughput (16.5MTPA, 16.8MT in Q2), given moderate pick up in global demand. Petrochemicals earnings will come off, due to moderation in spreads. Profitability will also improve due to higher gas realization of USD6.82/mmbtu (+USD2.8/mmbtu QoQ),” it said.

ICICI Direct research analysts said RIL’s consolidated EBITDA is estimated to grow 40.5% on-year to Rs 30,310.5 crore as all segments are expected to report healthy on-year growth. Sequentially, it is expected to grow 16.5% led by growth in the retail and O2C segments, they said. “We expect Jio to continue to lead subscriber addition with net subscriber addition of 8 mn. The monthly ARPU, like peers, is expected to witness growth, driven by tariff hike, at 4% QoQ at Rs 149. EBITDA (standalone) at Rs 9333 crore, is likely to grow 3.8% QoQ,” it said.

ICICI Direct also expects Reliance’s retail business to display a healthy recovery in Q3FY22 on the back of a buoyant festive season demand and robust store addition pace. Overall retail revenues are expected to increase 39% on-year to Rs 52,599 crore, it said. “On account of judicious cost saving initiatives and positive operating leverage, we expect EBITDA margins to improve 70 bps on-year to 6.8% (excluding other income on investments). Recovery in refining as well as petchem margins is expected to lead to growth of 14.5% sequentially (and 49.3% on-year) in O2C EBITDA to Rs 14,569.7 crore. E&P EBITDA is expected to improve 46.1% sequentially to Rs 1,564.8 crore as realisation for gas output from KG basin is expected to increase 69%.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, expects RIL’s consolidated operating profit to grow by 7.8% sequentially and 30.1% on-year to Rs 28,062 crore. He expects RIL’s consolidated PAT to grow by 8.4% sequentially to Rs 14,823 crore. Further, Shrikant Chouhan expects operating profit for Jio to increase 4% quarter-on-quarter led by higher ARPUs, which will be partly offset by rising costs and retail to increase by 27% sequentially driven by sustained strong rebound in demand during festival season. “We expect RIL’s standalone operating profit to increase by 15% qoq reflecting improvement in underlying refining and petchem margins and likely higher volumes for both the segments,” Chouhan, told Financial Express Online.

Ravi Singh, VP & Head of Research, Share India Securities, said Reliance Industries Ltd’s third quarter results are likely to be better than previous quarter, and the earrings may increase by 7-8% sequentially, mainly on improved gasoline and diesel margins. “The consolidated EBITDA is expected to rise quarter-on-quarter due to growth in oil to chemicals EBITDA, telecom growth, and retail growth. The overall estimates are expected to improve as a combination of higher chemical margins, details on the new energy vertical, and new partnerships in key segments would be the key drivers,” Ravi Singh told Financial Express Online. Financial Express