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RIL Q2 earnings: Brokerages expect decent show on recovery in refining

Telecom arm Jio and the retail business are set to deliver steady growth.|
Oct 17, 2019, 08.19 PM IST
Brokerages expect RIL’s consolidated profit after tax to grow 6-12 per cent on a year-on-year (YoY) basis.
Mumbai: Energy-to-telecom conglomerate Reliance Industries (RIL) is likely to report decent profit growth in September quarter earnings when it unveils its report card on Friday, backed by better performance of the refining business.

Telecom arm Jio and the retail business are also set to deliver steady growth.

Brokerages expect RIL’s consolidated profit after tax to grow 6-12 per cent on a year-on-year (YoY) basis. “A sharp recovery in refining margins coupled with lower ethane and LNG prices and higher petchem volumes should partly offset weakness in benchmark chemical margins and deliver a 7 per cent QoQ (quarter on quarter) growth in standalone earnings,” HSBC said in a note.

“Further, we expect RIL to report steady progress on KPIs (key performance indicators) for both its telecom (Jio) and retail businesses,” HSBC added.

Kotak Institutional Equities expects RIL’s standalone Ebitda to increase 6 per cent on a quarter-on-quarter (QoQ) basis led by higher refining margins at $9.5 a barrel and an increase in petchem volume post shutdown, which will be partly offset by lower petchem margin and a 4 per cent QoQ decline in crude throughput amid planned shutdown.

It also expects consolidated Ebitda to rise 7 per cent QoQ, reflecting higher contribution from Jio amid rising subscriber base and retail segment amid sustained, albeit a tad slower, growth in revenues.

Emkay Global estimates RIL’s consolidated Ebitda to increase 5% QoQ to Rs 22,440 crore due to higher QoQ refining, retail and Jio earnings. Petchem volumes should rise by 11 per cent due to shutdowns in June quarter

For Jio, Emkay expects 20.7 million in net subscriber additions for September quarter with flat ARPU (average revenue per user) at Rs 122. The brokerage said it is building in a 21 per cent consolidated tax rate, which implies profit after tax of Rs. 117.7 billion, up 16 per cent QoQ.

For the quarter ended September, RIL shares rose 14.3 per cent, while BSE’s 30-share benchmark Sensex climbed 3.2 per cent. For the year to date, RIL shares have advanced 22.4 per cent, while Sensex has logged 7.01 per cent gain

Currently, RIL has 15 ‘strong buy’, 11 ‘buy’, 5 ‘hold’, one ‘sell’ and one ‘strong sell’ ratings with a median price target of Rs 1,459, data from Reuters Eikon showed. On Tuesday, RIL shares traded 0.45 per cent higher at Rs 1,369.

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