Reliance Q2 Poll: Core profitability to rise, GRM may fall

Reliance Industries (RIL) will declare its second quarter (July-September) results today. According to a CNBC-TV18 poll, analysts on an average expect net profit of the company to grow marginally to Rs 5,400 crore during the quarter from Rs 5,352 crore in previous quarter.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be at Rs 7,400 crore in the quarter gone by as against Rs 7,075 crore in June quarter.

Gross refining margin (GRM) may decline to USD 7.8 a barrel in September quarter as against USD 8.4 a barrel in previous quarter. Expected GRM of USD 7.8 will reflect spread of around USD 2.3 a barrel over Singapore complex GRMs, feel analysts.

Analysts expect lower other income in second quarter as the company had booked gains from bond portfolio in first quarter.

Petchem EBIT is likely to increase to Rs 2,170 crore from Rs 1,888 crore quarter-on-quarter and oil & gas EBIT may rose to Rs 390 crore from Rs 352 crore. However, its refining EBIT may be seen falling marginally to Rs 2,930 crore from Rs 2,951 crore Q-o-Q.

Factors to watch out for

Analysts expect the core profitability of the company to improve. They do not see a big drop in profit after tax despite lower GRMs and lower other income.

According to them, petrochemical business and positive impact of rupee depreciation will help Reliance Industries in September quarter.

Exploration and production (E&P)

The rupee depreciation will help offset volume decline. KG D6 gas sales volumes should average around 13.5 mmscmd, down 12 percent Q-o-Q.

Analysts feel oil production should be at around 5.5 kbpd, largely flat Q-o-Q.

The rupee depreciation will lead to oil & gas reporting better EBIT.