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RIL to announce Q1 results on Friday. Here's what brokerages expect

Reliance Industries (RIL) is slated to announce its first quarter (April-June) results for the financial year 2019-20 (FY20) on Friday. The company is largely expected to report a drop in gross refining margin (GRM) on sequential basis, while petrochemical EBIDTA (earnings before interest, depreciation, tax and amortisation) is projected to fall up to 9 per cent on weaker margins.

The Mukesh Ambani-led company had reported a 9.8 per cent rise in its consolidated net profit at Rs 10,362 crore, in the fourth quarter ended March 31, 2019. In the year-ago period (June quarter of FY19), the firm had posted a 17.9 per cent increase in net profit at Rs 9,459 crore. 

For the quarter under review, RIL's GRMs are likely to come in at $8/barrel, down 2 per cent QoQ (quarter-on-quarter) due to unfavorable Brent-Dubai and refinery shutdown, while petchem EBITDA should see a 9 per cent fall qoq on weaker margins, say analysts at Emkay Global. 

"Retail/Jio EBIT (earnings before interest and tax) should grow at 5/9 per cent QoQ. We expect 25 million subscriber addition and ARPU (average revenue per user) flat at Rs 126 for Jio with Rs 3,700 crore EBITDA due to the transfer of tower and fiber assets," they wrote in a pre-results note.

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On the other hand, analysts at ICICI Securities peg Jio (Digital) to report an ARPU (average revenue per user) of Rs124 (down 2% qoq) and quarter-end subscribers at 330.7 million (up 8% qoq). 

"We estimate segment EBITDA at Rs 3,320 crore (down 23% qoq) assuming additional costs of Rs 1,000 crore due to the demerger of fibre/tower assets. We expect retail EBITDA at Rs 1,900 crore to remain flat qoq (up 61% yoy)," they said.

For the consolidated entity (RIL), Emkay Global sees RIL’s EBITDA/PAT at Rs 19,900 crore/10,100 crore, down 5 per cent/3 per cent, respectively on sequential basis. On YoY basis, EBITDA is estimated to fall 4 per cent while PAT is likely to rise 6.7 per cent. 

"Net sales or revenue is expected to grow 12.2 per cent YoY and 4.2 per cent QoQ to Rs 14,4434.3 crore. EBITDA margin is seen at 13.8 per cent, down 229 basis points (bps) YoY and 127 bps," their analysts said.

During the June quarter, shares of the company have slipped over 8 per cent as against nearly a 2 per cent rise in the benchmark S&P BSE Sensex. The S&P BSE Energy index, on the other hand, has slipped over 5 per cent during the period, ACE Equity data show. 

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"Reliance Jio operating earnings to see moderation due to higher opex (opearting expenditure), driven by the INViT change in capital structure. Overall, RIL EBITDA at Rs 19,300 crore is likely to decline 6 per cent YoY, while adjusted PAT of Rs 9,330 crore is expected to dip 2 per cent YoY," said Centrum Broking in a result preview note. The brokerage, too, pegs GRMs at $8/barrel.

Edelweiss Securities, however, sees a marginal recovery (up 3.7 per cent QoQ) in GRMs, which it believes, will be offset by olefin and intermediate margins in petchem, leading to a slight decline (-1 per cent QoQ) in standalone EBITDA. 

"Higher earnings at Jio (+5.5% QoQ) and retail (+0.8% QoQ) will lead to flattish consolidated EBITDA at RIL. Higher interest costs will lead to a 4 per cent QoQ decline in PAT," it says.

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