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Business News/ Companies / Company Results/  RIL Q3 Result Preview: Digital, retail business to drive profit, revenue; O2C business may remain under pressure
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RIL Q3 Result Preview: Digital, retail business to drive profit, revenue; O2C business may remain under pressure

RIL Q3 Result Preview: Reliance Industries is expected to report a decent set of Q3FY24 numbers, led by growth in digital services and retail business.

RIL Q3 Result Preview: Reliance Industries (RIL) is set to announce its December quarter (Q3FY24) scorecard on Friday, January 19. (PIxabay)Premium
RIL Q3 Result Preview: Reliance Industries (RIL) is set to announce its December quarter (Q3FY24) scorecard on Friday, January 19. (PIxabay)

Reliance Industries (RIL) is set to announce its December quarter (Q3FY24) scorecard on Friday, January 19. The company is expected to report a decent set of numbers for the quarter, mainly due to higher utilisation of refineries sustaining their strong operating efficiency.

Digital services and retail business is expected to lead RIL's growth for the quarter. However, the performance of the oil-to-chemicals (O2C) business and refining and petrochemical segment may remain subdued.

India's largest company by market capitalisation, RIL reported a 29.7 per cent year-on-year (YoY) rise in its September quarter consolidated net profit at 19,878 crore. EBITDA, too, saw a healthy 30.2 per cent YoY rise to 44,867 crore while the EBITDA margin jumped 390 bps YoY to 17.5 per cent.

RIL is a diversified conglomerate and it operates in various sectors, including energy, petrochemicals, retail, and telecommunications.

Q3 expectations

As per Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio, the revenue growth of RIL will be led by its consumer business, especially digital services and retail business whereas refining and petrochemical business will report lower growth in Q3FY24.

Also Read: Jio Financial tweaks plans after RBI move on unsecured lending

Moreover, he expects RIL's exploration and production (E&P) business to deliver positive performance. However, the O2C business may witness a decline on account of product cracks and lower realisations.

Sinha said EBITDA of RIL is expected to decline marginally on a quarter-on-quarter (QoQ) basis due to moderation in diesel cracks, narrowing of Russian crude discount and lower refining throughput due to maintenance shut-down and continued weakness in petrochemical margin.

Also Read: Asian Paints Q3 Results: Net profit rises 34% to 1,475 crore, revenue up 5% YoY

According to the estimates of Motilal Oswal Financial Services, RIL may report a 10.6 per cent YoY increase in net sales while adjusted PAT may rise 11.6 per cent YoY for Q3FY24.

The brokerage firm expects RIL's consolidated EBITDA may remain flat QoQ at 41,100 crore. The brokerage firm expects RIL's EBITDA at 16,800 crore (up 40 per cent YoY and up 3 per cent QoQ) for the O2C segment.

Also Read: HDFC Bank Q3 results: From HDB Financial IPO to distribution network - 5 important things to know from management call

Motilal underscored that further clarity on the 75,000 crore announcements in the new energy business, growth in retail store additions, and any pricing action in telecom are the key monitorable.

Kotak Institutional Equities expects RIL’s standalone EBITDA to decline nearly 9 per cent QoQ on sequential weakness in refining and petrochemical margins. It expects consolidated EBITDA to decline nearly 2 per cent QoQ as weaker standalone performance is partly offset by continued growth in digital services and organised retail.

Kotak expects an 8 per cent YoY increase in RIL's net sales and a 2.7 per cent YoY increase in adjusted PAT for Q3FY24.

In E&P, a nearly 18 per cent reduction in the HPHT (high pressure, high temperature) gas ceiling price would likely be offset by QoQ lower costs (from elevated levels in Q2), Kotak said.

"We expect (1) EBITDA for R-Jio to increase nearly 3.5 per cent QoQ, driven by nearly 12 million overall net subscriber adds (versus nearly 11 million QoQ) and modest increase in blended ARPU (average revenue per user) to 183 (versus 182 QoQ) on rising FTTH (Fiber to the Home) contribution and (2) retail to increase nearly 6 per cent QoQ, driven by increased store footprint, increased footfalls and benefits of operating leverage," said Kotak.

Shreyansh Shah, a research analyst at StoxBox believes even though the capex should moderate in Q3FY24 owing to lower requirements in digital services and upstream, the capex towards new energy and petrochemical expansion would be higher.

Shah underscored even though the O2C company may take a hit on its EBITDA due to moderation in gross refining margins (GRM), the decline will be offset by healthy EBITDA expected from Jio and Reliance Retail.

"We believe that increasing store count and footfalls in Reliance Retail, along with improvement in ARPU and an increase in net subscribers from Jio, will contribute to Reliance Industries performance in Q3FY24," said Shah.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 17 Jan 2024, 06:15 PM IST
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