Energy-to-telecom behemoth Reliance Industries (RIL) is likely to post robust earnings on Friday due to recovery in retail business and improvement in refinery margins. In general, July-September earnings for the oil and gas sector looks strong on the back of the relatively lower base of Q2FY21 and strong price movement in the quarter for both crude and natural gas which boosted earnings for upstream, gas utilities and also oil marketing companies (OMCs).
Shares of the company have already outperformed the benchmark equity index BSE Sensex on a year-to-date basis. Where RIL has advanced 36 per cent to Rs 2,699 since January, the 30-share Sensex has gained 28 per cent during the same period.
Commenting on the outperformance, Japanese brokerage firm Nomura said that the recent run has been driven by both the improving outlook for each of its key operating businesses and also investors taking Reliance’s planned forays into new energy business positively.
What to expect from Q2
Brokerage YES Securities sees 36.50 per cent YoY and 4.8 per cent QoQ growth in net profit at Rs 14,472.70 crore in Q2FY22. On the other hand, it believes that RIL may report 35.90 per cent YoY and 8 per cent QoQ growth in revenue for the quarter ended September 30.
Centrum Broking added that RIL should deliver a good Q2 with a 31 per cent and 38 per cent YoY uptick in EBITDA and PAT, respectively, helped by a strong recovery in retail and growth in the upstream segment.
“An improvement in EBIT for the retail or upstream segments will offset the muted Jio performance in Q2. Jio’s net subscriber addition of 7-8 million is expected to be sharply lower against the last two-quarter average of 14-15 million, driven by sharply higher churn of lower-rung customers in August-September. Average revenue per user (ARPU), however, grows to around Rs 142 levels, driving a 3 per cent QoQ EBITDA growth for Reliance Jio,” Centrum Broking said.
An assessment by JM Financial also showed that RIL’s net profit may grow 43.10 per cent YoY and 11.5 per cent QoQ in Q2FY22. It projected that retail EBITDA is likely to show a sharp uptick by 54 per cent QoQ at Rs 3,000 crore due to the easing of lockdown restrictions.
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