RIL Q4 earnings: Brokerages expect lower GRM, Arpu to hit profit; retail may show strong growth

Market participants should focus on the margin outlook of refinery and petchem business.

BCCL
Oil-to-telecom behemoth Reliance Industries (RIL) will report its March quarter earnings on Thursday. Market experts expect flattish net profit growth and lower petchem earnings due to weakness in margins.

The retail segment may continue to report strong growth while telecom arm Jio may witness margin decline in average revenue per user (Arpu) on QoQ basis.

Brokerage Emkay Global Financial Services projects 3.30 per cent year-on-year (YoY) rise in profit at Rs 9,767.30 crore on 20 per cent year-on-year jump in net sales at Rs 1,40,263 crore. It also sees 7 per cent quarter-on-quarter (QoQ) dip in gross refining margin (GRM) at $8.2 per barrel.


“We see lower petchem earnings due to margin weakness. Retail EBIT to grow by 8 per cent QoQ and Jio is expected to see 307 million subscribers. The telecom arm may report a slight decline in Arpu qoq to Rs 129,” Emkay said in a report.

Arpu stood at Rs 130 in Q3FY19.

Sharekhan expects RIL earnings to be impacted by weakness in refining margin and appreciation of the rupee partially offset by an improvement in LLDPE (Linear low-density polyethylene) and PVC margins.
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It expects GRM of $7.4 per barrel in Q4FY2019 against $8.8 per barrel in the sequential quarter ended December 2018.

Market participants will focus on margin outlook of refinery and petchem business.

Equirus Securities has projected 4.20 per cent and 1.90 per cent year-on-year rise in net profit and EBITDA on 23.5 per cent increase in net sales. However, it sees 277 basis points YoY fall in EBITDA margin at 13 per cent. The brokerage firm expects a GRM of $8.30 per barrel due to decline in cracks.

Edelweiss Securities says lower refining throughput (down 7% QoQ), GRM (down 9 per cent QoQ), lower PE cracks would lead to lower earnings at refining and petchem segments. However, this will be offset by higher earnings at telecom and retail (over 10 per cent QoQ). Interest costs are expected to remain flat QoQ leading to overall earnings declining by 5.4 per cent QoQ. However, it sees 2.80 per cent rise in core PAT on YoY basis.
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Shares of Reliance Industries settled 0.41 per cent up at Rs 1,345.30 on April 16.
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