Mukesh Ambani-led Reliance Industries (RIL) will declare its results for the September quarter on Friday and the pundits expect a good report card. The country's largest company by market cap is expected to post a 17 per cent jump in its consolidated net profit to Rs 11,158 crore for Q2FY20 as per Bloomberg consensus estimates, fuelled by higher growth in the consumer-focussed segments and a recovery in the refinery business.
RIL had reported net profit at Rs 9,516 crore for the same period last year. In fact, the company has outperformed the Bloomberg estimates on this front by a margin of 3-21 per cent in seven of the past 10 quarters. It's standalone profit is expected to increase 11.3 per cent to Rs 9,863 crore, the highest in six quarters, The Economic Times reported.
Gross Refining Margin
The oil-to-telecom conglomerate is also expected to arrest the fall of its gross refining margin (GRM) in the second quarter on the back of improving regional refining margins. The benchmark Singapore GRM has improved by 80 per cent sequentially to $6.5 per barrel in the September quarter. That's the highest in six quarters courtesy the uptick in petroleum product prices. RIL's GRM - which has typically maintained a premium of $3-4.5 per barrel over the regional benchmark - is reportedly likely to increase to $9.4 per barrel from $8.1 in the June quarter. If the projections come true, this will be the first uptick after eight consecutive quarters.
The refinery segment's operating profit may rise by 18 per cent sequentially to Rs 5,300 crore. Given that this segment accounts for half of RIL's revenue and a quarter of its operating profit, these numbers bode well for the shareholders.
However, the profitability of the petrochemicals segment may continue to remain under pressure for the second straight quarter due to lower polymer spread. The operating profit is likely to drop by 15 per cent year-on-year, while volumes may improve from the weakness observed in the previous quarter due to planned plant shutdown.
The telecom arm is expected to continue to report strong growth for the period under review. Jio's operating profit is expected to improve by 8 per cent to Rs 5,050 crore on a sequential basis following an addition of 23 million subscribers during the quarter. The average revenue per user may drop to Rs 120 per subscriber in the September quarter from Rs 122 in Q1FY20, when the telecom segment accounted for 22 per cent of the total operating profit.
The Bank of America Merrill Lynch (BofA-ML) said in a report that RIL is likely to become first Indian company to reach $200 billion market cap in 24 months backed by its new commerce venture and fixed broadband business.
For the quarter ended September, RIL shares rose 14.3 per cent, while BSE's 30-share benchmark Sensex climbed 3.2 per cent. The stock is currently trading 1.71 per cent higher at Rs 1396.15 apiece on the BSE.