Reliance Industries Ltd (RIL) will report its second-quarter results on Wednesday. Investors will closely watch the earnings report for growth in gross refining margin (GRM), petrochemical business and the outlook for the digital business—Reliance Jio and Jio Fibre.
RIL is likely to announce acquisition of Hathway Cable and DEN Networks on October 17, said sources. Both DEN and Hathway’s stocks rallied on Tuesday after the communication.
The quarterly result is also likely to report an increase in quarterly profit in its September quarter (Q2), driven by better margins from mainstay petrochemical business and fast-growing verticals Reliance Jio Infocomm Ltd and Reliance Retail. These will offset RIL’s weak gross refining margins in the quarter.
According to a Bloomberg poll of seven brokers, RIL’s consolidated net sales is expected to come in at USD 1.41 trillion; net profit is estimated at USD 9,630.20 crore by 10 brokers.
During the July-September quarter, RIL had raised prices of its key petrochemical products to offset higher crude oil prices and counter the effect of a weakening rupee. Bulk chemicals traders, suppliers for RIL’s petrochemical products and analysts tracking the company said it raised prices by 10-21% in Q2 2018-19 while year-on-year increase is 17-61%.
On the telecom front, Morgan Stanley expects Reliance Jio to have added about 35 million subscribers in Q2. Average revenue per user (ARPU) was seen declining by 2% quarter-on-quarter, leading to 13% quarterly revenue growth. “Some increase in opex (operating expenditure) could compress the earnings before interest, taxes, depreciation and amortisation (ebitda) margin, but we expect 10% quarter-on-quarter EBIDTA growth,” said Morgan Stanley research in a report dated 9 October.
EBIDTA is the measure of operating profit of a company.
However, the refining business slowdown could continue, the gross refining margins have fallen a tad bit this time around to USD 10.2 per barrel versus USD 10.5 per barrel last quarter.
On the petchem EBIDTA, last quarter it had hit a record high, the EBIDTA is expected to rise further by 8 percent quarter-on-quarter (Q-o-Q) to come in at Rs 8,490 crore, refining could see a bit of a downtick, so the EBIT could fall about one percent Q-o-Q, the retail business has been growing at a scorching pace, that pace is expected to continue and Rel Jio as well – subscriber additions will increase, so a revenue growth of around 12.5 percent is expected.
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Source: News18