Reliance Industries’ net profit in the June quarter is seen declining both on year and on quarter due to the subdued performance of its oil-to-chemicals business and slower growth in telecom. Revenue is seen dipping on year and marginally up sequentially.
An average of estimates from seven brokerage firms pegged consolidated net profit 8.1 per cent lower y-o-y at ₹16,509 crore and revenue 1.9 per cent lower at ₹2.15 lakh crore. Sequentially, the net profit will be 14.5 per cent down and revenue 1 per cent up. The street has estimated operating profit at ₹38,559 crore, 1.5 per cent higher on year and flat sequentially.
RIL will be reporting its results on July 21.
The O2C business, which contributes over 60 per cent of the conglomerate’s revenues, saw weak gross refining margins in the quarter under review, analysts said. Weakness in refining margins would have offset an improvement in petrochemical spreads due to softer gas and ethane costs.
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According to analysts, the benchmark Singapore GRMs fell 50 per cent sequentially to $4 per barrel in the June quarter because of a decline in diesel and aviation turbine fuel cracks.
The company’s upstream oil and gas business - in partnership with bp plc - though a small revenue contributor, is also likely to have seen weaker realisation during the quarter due to softer crude prices and the new gas pricing formula. This has also hit the bottomline, ICICI Securities said in a pre-earnings note. The upstream EBITDA is likely to be flat.
Retail business
The company’s retail business, under Reliance Retail Ventures, is the second largest revenue contributor to the group. Analysts expect a 3-6 per cent sequential profit growth in this segment as the company has been expanding its store network and adding more brands to its portfolio. Kotak Institutional Equities expects retail EBITDA to have risen 3 per cent QoQ, while Emkay Global pegged the growth at 2 per cent.
The retail division operates a range of formats and stores across the consumption basket such as Reliance Fresh, Reliance Trends, Reliance Digital, FMCG arm Reliance Consumer Products and pharmacy chain Netmeds.
Reliance Jio
Analysts are expecting Reliance Jio to have seen a slower growth in the June quarter with average revenue per user to be 1 per cent higher sequentially. Emkay Global Services said it expected net subscriber addition of 65 lakh in the quarter.
The EBITDA of RJio is seen to have gone up 3 per cent sequentially with a higher contribution coming from fiber-to-the-home. Revenue of the telecom business is seen higher by 2-3 per cent, according to analysts.
Recently, RJio launched Jio Bharat Phones priced at an affordable ₹999, in a bid to subscribers who were still on 2G networks. Analysts will be looking for more commentary on this.
The stock, which is an index heavyweight, has appreciated more than 23 per cent over a 90-day period, outperforming the Nifty 50 which has gone up 13.3 per cent in the same period.