RIL Q1 preview: Net may see sequential dip, modest growth likely in Ebitda

RIL's telecom division, Reliance Jio, took a tariff hike, effective this month. This, along with the anticipated commissioning of RIL new energy-related giga factories, is expected to remain in focus

Consolidated earnings for oil-to-telecom conglomerate Reliance Industries (RIL) may report sequential weakness, and modest year-on-year (Y-o-Y) growth in the June 2024 quarter (Q1FY25), said analysts. Lower refining margins are expected to moderate gains made from other businesses. RIL is slated to report its financial performance for Q1FY25 on July 19.

In a Bloomberg poll, 11 analysts estimated a revenue of Rs 2.30 trillion and nine analysts calculated a net income adjusted of Rs 16,634 crore for RIL.

“We bake in a 4 per cent Y-o-Y rise in RIL’s consolidated Ebitda (Earnings before interest, tax, depreciation, and amortisation) on a strong performance across verticals except O2C (Oil to chemicals),” wrote analysts with Nuvama in their note on the company.

Analysts with Kotak Securities held a similar view. “We expect RIL’s consolidated Ebitda to decline by 8 per cent sequentially, driven by weak O2C performance and muted growth in digital services and organized retail.”

Nuvama analysts added, “We anticipate O2C Ebitda to fall 11 per cent Y-o-Y on weak refining and weak petchem.”

Analysts with Centrum also said, “Sizeable sequential correction in gross refining margins (GRMs) is likely to impact Reliance’s O2C segment performance despite better capacity utilisation, petchem pricing, and margins.”

In terms of leading performance parameters for each business segment, analysts with Yes Securities said they expect GRMs at $10.5 per barrel, telecom average revenue per unit (ARPU) maintained at Rs 183 and a 14 per cent Y-o-Y growth in retail revenue.

RIL’s telecom division Reliance Jio made a tariff hike, with effect from July 3. This, along with an anticipated commissioning of RIL's new energy-related Giga factories, is expected to remain in focus.

Analysts with Goldman Sachs expect the street’s focus to shift to the ongoing quarter. They said: “We expect market focus to shift towards the second quarter where we believe refining margins recovery, telecom tariff hike, and strong same-store sales in retail will drive sequential Ebitda growth.”

The foreign brokerage also noted that it expected the market focus to move towards the upcoming annual general meeting (AGM), which may coincide with the potential start-up of the new energy Giga complex of solar-module capacity. According to industry sources, the solar-module factory is at an advanced stage of commissioning.

RIL is yet to declare the date for its upcoming AGM.