Reliance Industries may post strong growth in net profit, sales for Q3

Mukesh Ambani-led Reliance Industries (RIL) is expected to see strong growth in net profit and sales for the December quarter (Q3), aided by an improved performance in oil-to-chemicals, retail, and Jio business verticals, said brokerages. The country’s most valuable company will report its Q3 results on Friday.

Analysts expect profit to grow on both a year-on-year (YoY) and sequential basis.

“The company’s consolidated net profit in Q3 is seen up 10 per cent YoY because of strong gross refining margins and pick-up in retail business,” IIFL Securities report said.

Gross refining margin is the difference between the total value of petroleum products coming out of an oil refinery (output) and the price of the raw material (crude oil), and is measured on a per-barrel basis.

RIL’s standalone performance will also see improvement sequentially, led by refining profitability, said Prabhudas Lilladher in a report.

“Gasoline and diesel spreads for Q3 were at $16 per barrel and $12 per barrel, up $4 per barrel and $6 per barrel, respectively. We factor in stable refining throughput, given moderate pick-up in global demand. Petrochemicals earnings will come off, due to moderation in spreads. Profitability will also improve due to higher gas realisation of $6.82 per mmbtu, up $2.8 per mmbtu quarter-on-quarter,” it said.

Overall, RIL’s consolidated earnings before interest, taxes, depreciation and ammortisation (Ebitda) and profit after tax are expected to rise 14 per cent and 18 per cent, respectively, compared to Q2, according to an Emkay report.

“In Jio, the addition of subscribers has continued and we estimate 8 million subscription addition, with a 3 per cent sequential increase in average revenue per unit (ARPU) at Rs 149 and a 3 per cent rise in Ebitda,” it said.

ICICI Direct said the management’s comments on Jio’s ARPU trajectory and Jio Fiber would be closely watched.

The company’s retail business is expected to witness a strong Ebitda mainly because of increased revenue, said brokerages.