RIL climbs 2.5% ahead of Q3 results; GRM expected to see a slight fall

HDFC Securities expects RIL's EBITDA to increase by 4.7 per cent QoQ to Rs 14,300 crore.

Shares of Reliance Industries (RIL) climbed over 2.5 per cent in the intra-day session on Friday ahead of its December quarter (Q3FY20) results which is scheduled to be released later in the day.

At 12:54 pm, the stock was trading 2.42 per cent higher at Rs 1575 apiece on the BSE. During the day, it hit a high of Rs 1577.45 levels. 

For December quarter, Emkay Global Financial Services expects a slight decline in RIL's gross-refining margin (GRM) at $9/bbl against $9.4/bbl in Q2 (with an impact from the freight spike) and 5 per cent volume growth. Petrochemicals' earnings before interest, tax, depreciation, and amortisation (EBITDA) is estimated to fall 12 per cent QoQ on weak margins.

Consolidated EBITDA, on the other hand, is estimated to rise 5.5 per cent YoY to Rs 22,485.8 crore. On sequential basis, numbers are expected to see a rise of 1.5 per cent due to healthy growth in Retail/Jio from the festive season and higher average revenue per users (ARPU).

Jio is expected to add nearly 21 million net subscribers and see 2 per cent ARPU growth at Rs 122. "We are building in a 25 per cent consolidated tax rate, which implies a flat QoQ profit after tax (PAT) of Rs 11,350 crore.

Net sales (revenue) on consolidated basis is expected to drop 1.7 per cent YoY at Rs 1,53,720 crore. However, sequentially, the numbers are expected to rise 3.5 per cent.

"We expect RIL’s EBITDA to increase by 4.7 per cent QoQ to Rs 14,300 crore owing to 6 per cent rise in crude throughput following the planned shutdown in 2Q. We expect GRM of USD 9.1/bbl vs. USD 9.4 in Q2 but spread over Singapore GRM should widen to USD 7.5/bbl from USD 2.9/bbl in 2Q. Petchem EBITDA is likely to fall 5.5 per cent QoQ to Rs 82.72 billion due to lower polymer spreads this quarter," said HDFC Securities in an earnings preview note.