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O2C segment may drive RIL's Q4FY23 revenue; retail, telco stable: Analysts

RIL Q4 preview: Analysts expect steady improvement across all segments of Reliance Industries in Q4FY23, with stronger base gross refining margins, and reduced impact of windfall tax

Reliance Industries
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Reliance Industries

Lovisha Darad New Delhi

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Reliance Industries Q4 preview: Oil-to-telecom major Reliance Industries (RIL) is likely to see up to 14 per cent year-on-year (YoY) revenue growth to Rs 2.36 trillion in the January-March quarter (Q4FY23), as lower windfall tax, and stronger base gross refining margins (GRMs) could drive better oil-to-chemicals (O2C) business, said analysts.
The conglomerate will announce results after market hours on Friday, April 21.
Brokerages estimate an all-round beat performance for RIL. While higher subscriber additions, and stable ARPU (average revenue per user) is likely to boost the telecom segment's earnings, the retail segment will be driven by increased store footprint.
For the telecom segment, they expect Ebitda (earnings before interest, taxes, depreciation, and amortisation) to rise up to 16 per cent YoY, whereas, the retail segment is expected to clock 35 per cent YoY growth.
Overall, reported profit-after-tax (PAT) is likely to rise up to 14 per cent YoY to Rs 11,094 crore in Q4FY23, with up to 65 basis points (bps) expansion in operating profit margins to 17 per cent.
Ahead of Q4 results, shares of Reliance Industries traded flat at Rs 2,341 per share in Thursday's intra-day trade, as against 0.1 per cent rise in the S&P BSE Sensex.
Meanwhile, here's what brokerages estimate for RIL in Q4FY23:
Prabhudas Lilladher
The brokerage firm said that the company is well-placed to benefit from strength in refining margins, due to geopolitical disruptions, and higher gas profitability. Volumes, therefore, are estimated to rise to 30 mmscmd (million metric standard cubic meters per day) in Q4FY23 from ~19 mmscmd, in a year-ago period.
That apart, they expect steady performance in Jio, with 3.3 per cent QoQ revenue growth, and 2.1 per cent QoQ ARPU hike. Retail segment, on the other hand, is expected to show resilient profitability.
ICICI Securities
Analysts expect steady improvement across all segments of RIL in Q4FY23, with stronger base GRMs. Lower windfall tax, too, they said will drive O2C results. However, this refining boost may be offset by softness in integrated petrochemical business.
Overall, the brokerage firm models RIL's consolidated EBITDA growth at 7 per cent QoQ, and 5 per cent QoQ for PAT, as higher interest costs may offset operating earnings.
For the telecom segment, the brokerage expects Reliance Jio to deliver 2 per cent QoQ rise in Ebitda. Retail, too, is likely to sustain Q3 momentum, with an estimated 6 per cent jump QoQ in Ebitda.
Kotak Institutional Equities
The brokerage firm estimates RIL's consolidated Ebitda to improve 7 per cent QoQ and 10 per cent YoY to Rs 16,019 crore in Q4FY23, reflecting resilient GRMs, improved petro-chemical margins, higher exploration & production (E&P) production on higher gas production.
In the O2C segment, they expect refining margins to stay resilient, margin recovery in petro-chemicals, and reduced impact of windfall tax.
For telecom, Ebitda for Reliance Jio is likely to rise 2 per cent QoQ, driven by 5.7 million overall net additions. Blended ARPU, whereas, is likely to be flat at Rs 178.
Retail, analysts said, will clock 2 per cent QoQ increase in Ebitda to Rs 4,838 crore in Q4FY23, led by increased store footprint.
Analysts forecast the conglomerate's consolidated PAT to increase 7 per cent QoQ to Rs 16,960 crore, due to higher O2C earnings, and decent growth from retail, and Jio businesses.
However, they expect overall sales to decline 1.6 per cent QoQ to Rs 2.13 trillion in Q4FY23. Operating profit margins, meanwhile, are estimated to expand 65 basis points (bps) QoQ to 16.9 per cent.
Among downstream players, analysts said that RIL's strong growth outlook for consumer-centric business, reasonable valuation, and value unlocking in digital, and retail segments will add to shareholders' value in coming years. Therefore, given the run-up to the AGM, RIL remains a favourable investment bet, they added.


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First Published: Apr 20 2023 | 10:58 AM IST

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