RIL results today: Five things to watch out for

Mukesh Ambani-led Reliance Industries Ltd (RIL) will report numbers of its October-December 2016 financial quarter on Monday. The oil to telecom conglomerate has been in news for various developments in the last three months. Here is a list of factors that will guide the numbers.

1. Telecom

For most analysts tracking RIL’s stock performance, guidance for its telecom business would be key. RIL, which has heavily invested in RelJio, in December announced to extend free Jio services upto March this year. Guidance on what course the telecom venture will take post March would be sought for.

2. Gross Refining Margins (GRM)

Most analysts expect RIL's gross refining margins to be in the range of $10.7-$10.9 per barrel in the December quarter — sequentially higher from $10.1 per barrel reported for the September-ended quarter. Some see it touching $11.5 per barrel for the December quarter on the back of stronger product cracks and modest inventory gains. Gross refining margin is what company earns from turning every barrel of crude oil into fuel.

3. Petrochemicals Business

Performance-wise, analysts expect RIL’s petrochemical business to offset gains from the strong refining margins. Analysts expect petrochemical segments to report sequentially lower earnings before interest and tax (EBIT) on over-all weaker crack spreads environment and planned shutdowns. In addition, the street will also look for a commissioning update on its expansion projects. Part of the company’s expansion plan was to set up petcoke integrated gasification combined cycle (IGCC) plant, a refinery off-gas cracker (ROGC) unit and imports of ethane from USA as feedstock for the cracker business through dedicated ethane carriers 

4. Update on $1.5 billion penalty for Krishna–Godavari basin

In November, the government slapped a $1.55-billion penalty on RIL for producing ONGC’s share of natural gas in the Krishna-Godavari basin. RIL’s has served an arbitration notice against the penalty. Expect the management to update on the likely impact of the penalty on RIL’s financial performance and arbitration status. 

5. Retail Business

Watch out for management updates on the completion of re-starting operations at all of its 1400 fuel retail outlets. The company had restarted operations at more than 1000 fuel retail outlets. In addition, to expansion of its organised retail business, expect clarity on plans to merge organised retail with some of the company’s fuel retail outlets. The management may also share insight on demonetisation impact on both its fuel retail and organised retail business.