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Updates on Reliance debt reduction front needed: Probal Sen, Centrum Broking

Probal Sen-1200
We are likely to see much stronger GRMs going forward into the third quarter and that is encouraging, says Probal Sen, Senior VP, Research, Centrum Broking, talking about Reliance Industries earnings. Excerpts from an interview with ETNOW.

Reliance consolidated net profit for the September quarter rose to a record Rs 11,262 crore. How does the number look versus your own estimate?
It is almost bang in line. We were looking at about Rs 11,180 crore. So, the bottom line looks absolutely in line with our estimates.

How do you rate the overall performance - Rs 1.52 lakh crore on the top line, $9.4 on the GRM?
The $9.4 could have been higher if the shutdown had not happened because the shutdown does not just reduce the refining throughput, it also has an impact on the performance to the extent that the exact amounts of middle distillates that they can produce reduces because of the shutdown.

My view is that if the shutdowns had not happened, then the GRM could have been ahead of $10 even this quarter, given the way the Singapore GRMs have behaved. So, to that extent, in the third quarter, as the IMO impact gets more visible and they get back to full operations, we can look forward to a run rate of around 17.5 plus for each quarter refining throughputs. We are likely to see much stronger GRMs even going forward into the third quarter and that is encouraging.

Would you say that the margin breakup matches up with your expectations in both petchem as well as refining?
I do not have all my numbers in front of me, maybe petchem numbers seems a tad lower than what we had thought.

When it comes to Jio as well as the retail segment also, it seems to be a marginal beat for Reliance Industries?
The refining performance is in line but the opex for the refining segment surprisingly seems to be a bit higher. And therefore, in EBIT line, there has been a miss as far as we are concerned.

The numbers continue to surprise on the upside with substantial growth coming in on every segment and that is very encouraging. The key, however, in this quarter performance is not so much what has already happened. What investors would be waiting to see is any updates that they can give on the debt reduction front, which is what has been the key focus as far as the business is concerned.

The guidance on two fronts is going to be important. The consumer businesses continue to surprise and that is a big positive for Reliance.
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