Lower Cracks, Windfall Levies To Impact Earnings Sequentially


Reliance Industries Ltd. is likely to see its consolidated net profit drop around 19% sequentially in the second quarter of FY23, led by lower product cracks and higher windfall levies on export of refined products.  

The refining-to-retail conglomerate controlled by Mukesh Ambani is likely to see its consolidated net profit (adjusted from extraordinary items) drop 19% sequentially to Rs 14,456.5 crore in the three months through September, according to an average of analyst estimates tracked by Bloomberg. 

The consolidated net profit on a year-on-year basis is expected to rise 5.7%.

Consolidated revenue of the nation’s biggest company by market value is expected to increase 2.97% sequentially and 34.7% over the year earlier.

Operating income—or earnings before interest, tax, depreciation and amortisation—is estimated to drop 24.6% sequentially and rise marginally by 0.30% year-on-year. 

RIL is set to announce its September quarter results on Friday. 

RIL’s O2C segment’s Ebitda is expected fall 35% decline due to weaker cracks and windfall levies.

“The refining margins have come off from a life-time high combined with export duties,” Citi Research said in a report.

Reliance Jio Infocomm Ltd. is likely to benefit from higher subscriber additions and higher average revenue per user. 

The segment Ebitda is expected to increase by 6% over the previous quarter led by 10 million (1 crore) subscriber additions, and 1.7% quarter-on-quarter increase in ARPU, said Jefferies in a report.  

“We expect 4.4% QoQ growth in Jio standalone revenue to Rs 22,900 crore, with Ebitda likely to grow 4.7% QoQ to Rs 11,600 crore.”

According to Emkay Global Financial Services, net subscriber addition of around 9 million (90 lakh) is expected for Jio with a 3% QoQ rise in ARPU to Rs 181, it said in a note. 

Reliance Retail Ventures Ltd.’s “operating income is expected to rise 3% sequentially, trailing 7% QoQ growth in revenues as margins moderated due to seasonality”, Jefferies said in a report. 

The retail arm reported revenues of Rs 58,554 crore and an Ebitda of Rs 3,837 crore in the June quarter of 2022.   

(The earnings preview has been compiled from the research reports of Citi Research, Emkay Global Financial Services, Jefferies, and Spark Capital.) 


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