Reliance Industries, the country's largest company by market capitalisation, is expected to report good set of earnings for the July-September quarter with the gross refining margin rising 17 percent compared to the June quarter.
The stock rallied 6 percent during the quarter, but surged 25 percent year-to-date.
Most brokerages expect gross refining margin (GRM) at $9.5 a barrel for the quarter ended in September, against $8.1 a barrel in Q1FY20. Singapore complex margin was strong at $6.5 a barrel during the quarter against $3.5 per barrel in Q1. As a result, refining EBIT growth could be in double digit QoQ.
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Hence, brokerages feel higher gross refining margins, petchem volumes, telecom and retail businesses are expected to contribute to earnings. A lower tax cost could also be supported profitability.
"We expect standalone EBITDA to increase led by higher refining margins at $9.5 per barrel (up $1.4/bbl QoQ) and petchem volumes, which will be partly offset by lower crude throughput amid shutdown and moderation in overall petchem margins," said Kotak Institutional Equities which sees 9 percent growth in profit QoQ.
The brokerage feels consolidated EBITDA will be further boosted by higher contribution from Jio amid rising subscriber base and steady ARPUs and retail segment amid sustained, albeit a tad slower growth in revenues.
HDFC Securities also expects RIL's EBITDA to increase due to higher refining EBITDA.
Petchem volumes should rise by 9.5 percent due to shutdowns in Q1 while unit EBITDA is expected to fall 10 percent owing to lower polymer spreads, the brokerage said, adding refinery crude throughput is likely to be 8.2 mmt against 7.5 mmt in Q1FY20.
Brokerages expect the Reliance Jio subscriber growth to be robust with the significant addition of users in Q2.
Key issues to watch out for would be GRM outlook, petrochemical margins, telecom subscribers, future capex and clarity on InvIT valuations for Jio’s fibre assets.Disclaimer: Reliance Industries Ltd, which also owns Jio,. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.