Oil-retail-to-telecom major Reliance Industries' January-March quarter earnings are expected to get strong support from Jio business, though refining business could see some decline due to fall in oil prices and nationwide lockdown, according to brokerages.
Brokerages feel the consolidated profit and revenue may see marginal decline sequentially due to some weakness in the refining business, but margin may get support from petrochemicals and telecom segments.
Gross refining margin for the quarter is likely to be around $8.0 a barrel against $9.2 a barrel in December quarter 2019.
"GRM should be at around $8.0 a barrel in Q4FY20 (versus $9.2 in Q3FY20) owing to fall in middle distillate spreads QoQ," HDFC Securities said.
Centrum Broking said non-energy businesses continued to save the day for RIL, which is likely to see a sharp $1.2 a barrel QoQ dip in GRMs and a 7 percent QoQ decline in Petchem EBIT.
According to brokerages, Reliance Jio is expected to report strong double-digit growth QoQ in all earnings parameters in the quarter ended March 2020 as tariff hikes in December may boost average revenue per user (ARPU) which could be around Rs 134-139 in Q4, with likely addition of 20 million subscribers during the quarter.
"Lower standalone contribution will be partly mitigated by higher Jio EBITDA (up Rs 780 crore QoQ) led by a rise in subscriber base to 390 million (up 20 million QoQ) and ARPU to Rs 135 per month (up Rs 7 QoQ), while retail EBITDA may remain steady QoQ," said Kotak Institutional Equities which sees Jio profit rising 49 percent QoQ, EBITDA 14 percent, EBIT 20 percent and revenue 11 percent in Q4FY20.
ARPU in Q3FY20 was at Rs 128 and Rs 126 in Q4FY19.
Dolat Capital expects Jio to report 41.5 percent YoY growth in revenues led by 29 percent increase in average subscribers and 10 percent uptick in ARPU to Rs 139 YoY (up 8 percent QoQ) led by price increase in December 2019.
"Jio's profit may increase 66.1 percent, and EBITDA 51.8 percent YoY, while Jio's QoQ revenue/net revenue/EBITDA could increase by 12/14/18 percent," the brokerage said.
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