RIL Q3 Results: Five leads to watch out for - Mint.com
17-Jan-2020 10:33:56 AM
New Delhi
New Delhi, Jan. 17 -- Reliance Industries Ltd (RIL) is likely to report muted earnings growth in the fiscal third-quarter as gains from its telecom and retail arm will be offset by weakness in its refining and petrochemicals business, analysts said.
According to a Bloomberg survey of 13 brokers, RIL's consolidated net sales are expected to come in at Rs.1.42 trillion and net profit is estimated at Rs.11,181 crore. The company is scheduled to report its earnings on Friday.
Five leads to watch out for in RIL's second-quarter earnings:
Retail: Scaling up JioMart
On December 30, Reliance Retail Ltd, the retail arm of Reliance Industries Ltd, soft-launched its "new commerce" venture by sending invites to Jio telecom users for registering on the new venture -- JioMart. Calling itself "Desh Ki Nayi Dukaan", JioMart will currently cater to online shoppers in the suburban Mumbai areas of Navi Mumbai, Thane, and Kalyan. The Street expects updates on how RIL plans to scale up JioMart.
Debt Reduction: Updates on the deal with Saudi Aramco
In August, RIL announced its plan to sell a 20% stake in its flagship chemicals and refining business to Saudi Aramco in a deal valued at $15 billion. RIL seeks to cut its massive debt and also secure an assured supply of crude oil to its refineries through this deal. The Street awaits updates on the deal with Saudi Arabian Oil Co.
Petrochemicals: Awaiting recovery in margins
RIL's petrochemical performance may be impacted as chemical margins have declined. PX (paraxylene), PTA (purified terephthalic acid), and ethylene all declined quarter-on-quarter while MEG (mono ethylene glycol) and butadiene margins improved marginally. Analysts expect petchem margins to remain under pressure given the supply glut in the market. "We expect further and sharper weakness in petchem earnings as key product prices/margins were weaker. We assume petchem Ebit (earnings before interest and tax) to decline 15% quarter-on-quarter and 20% year-on-year," Nomura Financial Advisory and Securities (India) Pvt. Ltd said in an 11 January note.
Refining: Bleak outlook on refining margins
The third quarter saw a collapse across refining margins and analysts expect RIL's gross refining margin or GRM, the amount a company makes by converting a barrel of crude to fuel, at around $9.4 per barrel. With the implementation of the International Maritime Organisation's norms, the Street had expected an uptick in refining margins. However, the lack of a spike in diesel margins has disappointed so far. The Street would await guidance on GRMs going forward.
Telecom: Largest mobile service provider
Reliance Jio's subscriber base reached a 369.93 million users mark and the company replaced Vodafone Idea as the country's largest mobile services provider. FTTH launch and enterprise business will be the key areas of growth going forward. Partnership with Microsoft Azure will also help Jio adopt the next-gen technology solutions at a large scale for companies ranging from MSMEs to large firms. The implementation of IUC charges in October and tariff hikes on existing plans in December will incrementally boost ARPU going forward. Published by HT Digital Content Services with permission from MINT. For any query with respect to this article or any other content requirement, please contact Editor at contentservices@htlive.com