RIL Q4 preview: Revenue seen weak, windfall tax impact to be lower; retail, telecom biz steady, result on April 21

Billionaire Mukesh Ambani's Reliance Industries (RIL) is set to kick start the Q4 season for the oil and gas sector this week. RIL, which is the largest company in terms of market share, will announce its March 2023 quarterly report on April 21. In Q4, RIL is expected to post a decline in revenue in both YoY and QoQ terms. However, experts believe the impact of the windfall tax will be lower in the quarter.

There is a mixed opinion when it comes to gross refinery margins. But O2C business is likely to log between 8% to 11% sequential growth in EBITDA.

On the other hand, RIL's telecom and retail business will continue to be steady even in Q4FY23.

As the date for the Q4 announcement nears, RIL's share price on Wednesday was in the green. The stock closed at ₹2,351.65 apiece up by ₹11.60 or 0.50% on BSE.

RIL is the heavyweight stock and its m-cap is over ₹15.91 lakh crore by end of April 19.

Earlier, RIL witnessed decent third-quarter earnings for FY23. In Q3, the company posted a consolidated net profit of ₹15,792 crore declining by 14.8% YoY, while revenue from operations climbed by 15% YoY to ₹2.20 lakh crore. EBITDA came in at ₹38,460 crore, up 13.5% on-year.

By end of December 31, 2022, the company's outstanding debt stood at ₹303,530 crore ($ 36.7 billion), while cash and cash equivalents were at ₹193,282 crore ($ 23.4 billion). RIL's net debt is lower than annualized EBITDA.

What to expect from RIL in Q4?

In its preview report, ICICI Direct analysts said. "RIL's consolidated EBITDA is estimated to increase 6.5% QoQ to ₹37540.6 crore. Reliance Jio (Jio), will lead sub-addition with ~6.5 million net sub-additions during Q4. The monthly ARPU, like its peers, is expected to witness modest growth amid a lower number of days, at ~0.6% QoQ at ₹179. Overall revenues are expected at ₹23455 crore, up 2% QoQ. EBITDA, at ₹12,112 crore, is likely to grow 0.9% QoQ. Overall EBITDA margins are expected at 51.6%, down 60 bps QoQ due to higher network expenses on account of 5G and net profit at ₹4510 crore."

Further, the brokerage added, "On the back of robust store addition trajectory (added 2100 new outlets in 9MFY23) and favourable base, we expect Reliance Retail to register revenue growth of 20% YoY to ₹69415 crore. Excluding Jio connectivity, we expect core retail revenue to increase 24% YoY. We expect EBITDA margins (excluding other income) to improve 70 bps YoY to 6.9%. Improvement in GRMs is expected to lead to the growth of 10.5% QoQ in O2C EBITDA to ₹15387 crore. E&P EBITDA is expected to remain flat QoQ at ₹3854 crore."

Overall, for Q4FY23, ICICI Direct expects RIL to post a consolidated revenue of ₹2,01,245.7 crore down by 8.8% QoQ and 5% YoY. Consolidated EBITDA is likely to be at ₹37,540.6 increasing by 6.5% QoQ and 19.7% YoY. PAT is factored at ₹17,544.5 crore, up by 11.1% QoQ and 8.3% YoY.

Meanwhile, Kotak Institutional Equities expect RIL to post better Q4 for all key segments.

Kotak's note said, "We expect RIL’s consolidated EBITDA to increase 4% qoq and 16% yoy. In O2C, refining margins remain resilient, windfall tax impact should be further reduced, and there would be marginal recovery in petchem. We expect standalone EBITDA to increase 7% qoq (10% yoy). For Jio, we estimate EBITDA to rise 2% qoq (16% yoy), driven by higher net adds and qoq stable APRU at ~Rs178. For Retail, we expect EBITDA to grow 2% qoq (on festive quarter) and 19% yoy.

On the other hand, Avishek Datta analyst at Prabhudas Lilladher said, "RIL results will be lower due to the QoQ decline in diesel, ATF spreads despite factoring in lower windfall tax impact. We estimate refining throughput of 16.5MTPA, (16.2MT in Q3). Petchem profitability will improve QoQ due to demand recovery post China reopening. We expect steady Jio performance (3.3%QoQ revenue growth and 2.1% QoQ ARPU hike), while retail segment profitability should be resilient."

Accordingly, Datta believes RIL's earnings to decrease QoQ due to lower GRMs (adj for windfall tax). Jio and retail performance will be steady.

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