RIL Q1 results, dividend decision on Friday: Profit may drop up to 17% YoY on weak O2C print

Reliance Industries, the most-valued firm on Dalal Street, will report with June quarter results on Friday. Along with its quarterly earnings, the oil-to-telecom major would consider a proposal of dividend payment to shareholders. This would come a day after RIL shares went ex-date for demerger of financial services business (to be renamed as Jio Financial Services or JFS).  Analysts largely expects Reliance Industries to report up to 17 per cent drop in consolidated net profit for the June quarter, as  steady consumer business growth will be offset by a decline in oil-to-chemicals (O2C) segment.

They see consolidated sales to drop 4-8 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.

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. 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.

Kotak Institutional Equities expects consolidated profit for the oil-to-telecom major to drop 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, the 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.

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.

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