Reliance Industries Ltd, the largest Indian company based on market capitalization, is likely to report a double-digit on-year growth in revenues and income for the third quarter ended December 2021, driven by strong performance in refining, telecom and E&P businesses.
The oil-to-telecom-and-retail giant will declare its results for the quarter later today.
Brokerages expect the Mukesh Ambani-led company to report 50-60 percent year-on-year growth in its consolidated revenues at Rs 1.81-1.91 lakh crore for the quarter, and a 12-16 percent growth in post-tax profit (PAT) to Rs 14,800-15,300 crore for the quarter.
The company had reported a consolidated profit of Rs 13,101 crore on consolidated revenues of Rs 1.18 lakh crore during the corresponding quarter a year ago. The figure for the previous quarter stood at Rs 13,680 crore with the company registering consolidated revenues of Rs 1.7 lakh crore.
Earnings Estimates
Brokerage firm Motilal Oswal expects a robust growth in the company’s O2C (oil to chemical) business followed by retail. It forecasts an on-year growth of 61.7 percent in consolidated revenues to Rs 1.91 lakh crore. On a sequential basis, this will be a growth of 13.7 percent.
It expects the refinery throughput at 17.2 MMT (million metric tonnes) with the per-tonne EBITDA (earnings before interest, tax, depreciation and amortisation) improving to $116.6 on improved Singapore GRM and petrochemical margins.
“Singapore GRM improved further QoQ in Q3FY22, primarily led by improved diesel and ATF cracks (which almost doubled QoQ),” Motilal Oswal said in a report.
SG GRM in diesel improved by $5.8/bbl (billion barrel) on quarter to $10.9/bbl. GRM’s pf ATF (aviation turbine fuel) has improved $4.9/bbl QoQ to $10.3/bbl. The improvement was aided by festive season demand in Asia and increased air travel in the western nations, respectively.
Naphtha prices increased to $81.7/bbl from $73.6/bbl in Q2FY22, with cracks improving to $3.4/bbl from $1.9/bbl in Q2FY22.
An increase in petchem prices (due to power rationing measures in China, which led to shutdowns at some units) aided deltas for PE (polyethyline) and PVC (polyvinyl chloride) by 13 percent and 32 percent respectively on a quarterly basis (-3 percent and 24 percent YoY), while PP (polypropylene) was flat QoQ and down 16 percent YoY.
Motilal Oswal expects consolidated EBITDA to grow 39 percent YoY and 15 percent on quarter to Rs 30,000 crore with the EBITDA of O2C business coming in at Rs 15,000 crore, a growth of 73 percent on-year and 21 percent on-quarter.
The EBITDA for its telecom business is expected to grow 17 percent YoY and 5 percent QoQ to Rs 9,500 crore, while retails is expected to post another quarter of strong growth with its EBITDA growing 41 percent YoY and 31 percent QoQ to Rs 3,600 crore.
The brokerage expects a 16 percent on-year growth in PAT at Rs 15,300 crore, a sequential growth of 8 percent.
International brokerage JP Morgan expects strong recovery in refining and E&P (exploration and production) to drive earnings growth.
“Overall the two key components of the company’s refining margin slate, diesel and jet kero have seen cracks improving as transportation has picked up,” the brokerage said in its report.
Cracks for the two critical products should continue to improve in CY22 as transportation picks up further, the near-term Omicron impact notwithstanding, it said.
JP Morgan expects strong growth in retails business while telecom and petchem are expected to remain steady.
The company’s SG GRMs may improve from $5/bbl in the previous quarter to over $8/bbl in this quarter, it said, estimating the consolidated EBITDA at Rs 28,259 crore with a sequential growth of 9 percent and a YoY growth of 31 percent.
Net profit is pegged at Rs 15,033 crore with an on-year growth of 15 percent and a sequential growth of 10 percent.
Kotak Institutional Equities also expects strong growth across businesses and forecasts a growth of 55 percent in consolidated revenues at Rs 1.80 lakh crore, a sequential growth of 7.5 percent.
It expects an EBITDA of Rs 28,000 crore with a YoY growth of 30 percent and a sequential growth of 7.8 percent.
“We expect RIL’s standalone EBITDA to increase by 15 percent QoQ reflecting (1) improvement in underlying refining and petchem margins and (2) likely higher volumes for both segments,” Kotak said in a report.
Apart from this, it expects EBITDA for (1) Jio to increase 4 percent QoQ led by higher ARPUs, which will be partly offset by rising costs and (2) for retail to increase by 27 percent QoQ driven by sustained strong rebound in demand during festive season.
PAT is expected at Rs 14,820 crore for the quarter at a YoY growth of 12.1 percent and 8.4 percent QoQ.
The stock of Reliance Industries closed at Rs 2,477.5, down Rs 44.1 (1.75 percent) from its previous close, on the National Stock Exchange on January 20. The stock is up 21 percent during the past one year and has generated returns of 9 percent during the past one month.
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