“Overall performance expected to be average due to weak performance from refining segment with crude throughput at 17.0 million tone (MT). Weaker product spreads on a quarter on quarter (QoQ) basis. Production from petchem estimated at 9.6 MT with relatively weaker polyester margins on a QoQ basis,” analysts with KR Choksey noted.
For its refining segment, RIL
is expected to report gross refining margins in the range of $7.7 per barrel to $8.2 per barrel. In the March 2018 quarter, RIL
reported healthy GRMs at $11 per barrel. The GRM trend has been on a decline for the past few quarters with GRM in the December 2018 quarter reported at $ 8.8 per barrel. Jio, RIL’s telecom business, is expected to report around 10 per cent QoQ revenue growth with a slight dip in Average revenue per user (ARPU) by 1-2 per cent to Rs 127. Recent reports suggest the operator has crossed 300 million subscribers and likely to report a strong subscriber momentum even from the feature phones. “Jio
is likely to add 28 million net subscribers in 4QFY19, while ARPU could decline marginally by Rs 2 per cent QoQ, leading to a 9 per cent QoQ revenue growth,” noted analysts Parag Gupta and Gaurav Rateria of Morgan Stanley.
In terms of guidance from the management, the street will look out for estimates on the debt side. In March, the company agreed to sell its East-West pipeline project to Brookfield for Rs 13,000 crore. In April, RIL also announced transfer of its optic fibre cable and tower infrastructure to two infrastructure investments trusts (InvITS). Both of these developments should lead to a substantial reduction in debt for the company. Analysts will also look for clarity of the ramp-up schedule for the company’s petcoke gasifiers.
“The collapse in spot gas price, the underlying economics of the gasifier have weakened,” JP Morgan
noted in its report. Jio's capex numbers as well as network costs have been a source of concern in the past and their commentary will be expected on the status of any impact on existing spectrum sharing deals with Reliance Communication
that can possibly impact Jio’s service.
In February, RIL announced $110 million of new investments in five companies
related to logistics, pharma retail and data management/AI space, end-to-end voice technology and simulation services for manufacturing. In April, the company entered into a strategic transaction with Haptik Infotech, for a transaction size estimated to be around Rs 700 crore, with Rs 230 crore as the consideration for the initial business transfer.
In their research notes, analysts have also pointed out investors for the oil-to-telecom company are now technology investors. “The marginal investor in RIL is the tech investor and while valuations would not be a concern, weakness in the core cash generating energy business could limit the upside,” analysts with JP Morgan