RIL net to dip on weak petchem margin, falling KG-D6 output

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Moneycontrol Bureau

Reliance Industries  (RIL) is expected to post a Year-on-Year (y-o-y) decline in profit for the third consecutive quarter (April-June) as margins in its core businesses of refining and petrochemicals continue to be under pressure. However, as has been the case in the last couple of quarters, analysts expect the company's profit to receive some support from other income, which is largely derived from treasury operations utilizing the excess cash on its books.

A consensus of estimates by various brokerages have pegged consolidated net profit to decline around 22% to Rs 4,400 crore,YoY and sales are expected to rise around 5% to Rs 85,300 crore. RIL will report earnings for the June quarter on Friday.

Check out CNBC-TV18's estimates on RIL

Brokerages say these are the factors which will impact RIL’s Q1 numbers

 *Crude throughput to be approximately 17 million metric tonnes as against 16.8 mmt, YoY.

 *KG-DG output has averaged at 34 million metric standard cubic metres per day (mmscmd) from 49 mmscmd, YoY.

 *Gross refining margins (GRM) or the difference between the cost of crude and the price of refined products is estimated to be around USD 7/bbl versus USD 10.3/bbl, YoY.

In its earnings preview note, Bank of America Merill Lynch said: "Our concern is that global economic downturn may hit RIL's GRM and petrochem margins. Thus, the company’s earnings may deteriorate in FY13. Weakness in refining and petrochemicals was already visible in 2H FY12," said the firm. BofaML believes that the improvement in outlook is likely if GRM from coke gasification rises, fundamentals better, gas price is increased, petrochemical capacity is expanded and gas output recovers.

 The firm sees a 24% YoY fall in RIL’s profit in April-June, and 14%YoY decline in annualised earnings per share during the quarter. The company stock has declined 3.5% when compared to the 4% rise in Sensex since Jan 2012.

Motilal Oswal and Angel Broking too expect declining KG-D6 output and weak petchem margins to wear down profits for the quarter. Topline, however, would grow marginally because of higher refining and petchem volumes, says K.R Choksey in a note.

 Independent analyst S.P Tulsian expects a marginal increase of 30-50 bps in GRMs which can surprise markets. He believes the surplus cash of around Rs 70,000 crore which the company has deployed to generate income will boost profits.