RIL Q1 results, dividend: Consumer-facing segments may do well, O2C a drag

The June quarter results of Reliance Industries will likely be dragged by oil-to-chemical (O2C) segment, with its year-on-year (YoY) profit seen falling anywhere between 8 per cent and 17 per cent on a 2-8 per cent YoY drop in sales. Profit may fall even more on sequential basis, as weakness in O2C business may offset modest growth in telecom and retail segments, analysts said. All eyes would be on the management commentary on segments' performance and any clue on Jio Financial Services (JFS) listing, as while Piramal Pharma (45 days) and NMDC Steel (4 months) took some time to list post demerger, a few analysts see the JFS listing in a month's time.

Elara Securities expects RIL to report a 6 per cent YoY Ebitda growth, led by a 3 per cent Ebitda growth in retail and 12 per cent Ebitda growth in digital services (telecom), though partly offset by standalone Ebitda (primarily O2C) decline of 15 per cent YoY. This brokerage sees gross refining margin falling 52 per cent YoY to $16 a barrel.

On a sequential basis, "RIL’s Ebitda would be negatively impacted by 9 per cent drop in O2C Ebitda (37 per cent contribution) due to lower gross refining margin and inventory losses. Retail/Jio businesses are expected to grow modestly 4 per cent/2 per cent QoQ while upstream business Ebitda is estimated to remain flattish. ARPU is expected to grow to Rs 180.60 from Rs 178.80 in Q1 FY23," Systematix Institutional Equities said in a note.

ARPU stands for average revenue per user.

As far as top and bottom lines go, Kotak Institutional Equities sees consolidated profit for RIL to fall 14 per cent year-on-year (YoY) to Rs 15,417.70 crore for the June quarter compared with Rs 17,955 crore in the corresponding quarter last year. Consolidated sales for RIL is seen falling 4 per cent to Rs 2,09,771 crore compared with Rs 2,19,304 crore YoY.

For RJio, this brokerage expects Ebitda to rise 15 per cent YoY (3 per cent QoQ) driven by 90 lakh overall net addition and a marginal increase in ARPU to Rs 181 from Rs 179 in the March quarter. For retail, Kotak sees Ebitda to grow 16 per cent YoY (3 per cent QoQ) on increased store footprint. In the case of O2C, Ebitda would likely decline 8 per cent, sequentially on auto fuel over-recoveries, Kotak said.

JM Financial is pegging profit figure for the oil-to-telecom major at Rs 15,764.90 crore, down 12.2 per cent YoY. It sees sales at Rs 2,13,471 crore, down 2.7 per cent YoY.

Nomura said it sees refining margins falling to $10 per barrel from $12 per barrel last quarter and lower export volumes, as RIL declared Force Majeure on exports from the Sikka port on account of the Biparjoy cyclone, which was partly offset by higher petchem spreads. On YoY basis, it pegs RIL's Q1 consolidated profit at Rs 14,990 crore, down 17 per cent YoY. It sees consolidated sales at Rs 2,01,530 crore, down 8 per cent YoY.

For the consumer-facing business, Nomura India sees Jio’s Ebitda to rise 3.5 per cent sequentially to Rs 12,600 crore driven by strong subscriber additions of 75 lakh and a modest increase in average revenue per user (ARPU) to Rs 181.50. It expects RIL’s retail segment Ebitda to see a 6 per cent sequential growth at Rs 5,000 crore, benefiting from the robust pace of store additions and rising footfalls.

"We estimate RIL’s 1QFY24F consolidated Ebitda to moderate 1 per cent sequentially to Rs 38,000 crore, as a healthy performance across both its consumer businesses and upstream will likely be offset by the O2C (Oil to Chemicals) business underpinned by lower refining margins," it said.

BofA Securities, on the other hand, sees consolidated profit at Rs 16,160 crore, down 10 per cent.

On a sequential basis, Prabhudas Lilladher said refining throughput may come in at 17 MTPA against 17.1 mt in March quarter. Petchem profitability will improve sequentially, due to demand recovery post China reopening. It expects Jio to show steady performance sequentially (2.9 per cent QoQ revenue growth and 1.5 per cent QoQ ARPU hike), while retail segment profitability should be resilient.

Reliance Industries, meanwhile, would also consider a proposal on dividend payment today.

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