Adding: “As we approach IMO implementation on January 1, 2020, diesel margins have risen 9 per cent YTD since end-2018 and gasoline margins have improved as refineries try to maximize diesel output by lowering gasoline output. As well, cheaper gas prices should keep RIL's operating cost inflation low. We also lower our tax rate forecasts by 400bp and for F2020 and F2021 to reflect the new corporate tax rate of 25.2 per cent.”
Analysts at IIFL, too, maintain their bullish stance on the company. RIL, they believe, is a peculiar case within the oil & gas space, whereby the weakness in the petrochemical segment is partly offset by the strength in refinery performance and the scale-up in consumer businesses (R-JIO and R-Retail), set to drive the overall earnings growth.
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"We maintain RIL’s consolidated earnings CAGR of 11% till endFY22ii, driven by the non-oil businesses (37% share in overall Ebitda). Our SoTP values RIL’s oil-t-chemical (O2C) business at enterprise value (EV) of $67 billion on FY21 and, to that extent, offers upside potential. RIL is our top pick in the sector, as its earnings remain relatively insulated in a volatile commodity price environment. Key triggers to watch are: induction of investor in fibre InviT; details on the Aramco transaction, and visible reduction in net debt," wrote Harish Dole, an analyst tracking the company at IIFL in a recent report.