Q2 result preview: O2C business may drag RIL to another weak quarter

May be partially offset by strong performance in telecom, retail

For Reliance Industries Ltd (RIL), the September 2024 quarter (Q2FY25) may turn out to be yet another weak one as refining margins drag, say analysts.

Two brokerage firms — ICICI Securities and Nuvama — expect a 1-13 per cent dip in reported profits in Q2FY25 from a year ago. Kotak Institutional expects a modest 2.2 per cent rise. Revenue, at best based on available analyst estimates, could rise up to 4 per cent.
 

Analysts at Nuvama anticipate a 6 per cent decline in the company’s consolidated Ebitda (earnings before interest, taxation, depreciation, and amortisation) on account of weakness in the oil-to-chemicals (O2C) segment, partially offset by strong performance across consumer businesses and the oil and gas segments. The brokerage firm expects Ebitda for the O2C business to fall 27 per cent from a year ago.

 

The conglomerate is slated to announce its Q2FY25 financial results on October 14. If analyst estimates hold, this will be the third consecutive quarter when RIL’s consolidated net profit will dip. In the June 2024 quarter, RIL’s consolidated profit declined 5.5 per cent from a year ago.
 

In a Bloomberg poll, six analysts estimated revenue of Rs 2.39 trillion and three analysts estimated a net income adjusted of Rs 20,045 crore.
 

Analysts with PL Capital noted for RIL’s standalone segment, which largely comprises the O2C business, its refining margins are expected to decline and petchem will remain under pressure.

ICICI Securities estimated a $0.8/barrel sequential decline in RIL’s gross refining margins.
 

While the consumer business is expected to partially offset the O2C hit, analysts appear divided on the outcome for retail business.
 

Analysts at Kotak Securities said RIL’s consolidated Ebitda’s sequential rise may be mainly driven by telecom tariff hike. “We expect weak result for retail and muted for O2C,” they added.