RIL Q1 Results Preview: Lower Demand, Refining Margins Seen Hurting Profit
The Reliance Industries Ltd. logo is displayed at the company’s annual general meeting. (Photographer: AdeelHalim/Bloomberg)

RIL Q1 Results Preview: Lower Demand, Refining Margins Seen Hurting Profit

Reliance Industries Ltd.'s profit and revenue is expected to decline as demand for petchem fuel and refining margins fell in the quarter disrupted by the coronavirus lockdown.

Consolidated net profit of India's biggest company by market capitalisation is expected to fall 23% year-on-year to Rs 7,725 crore in the quarter ended June, according to the average of analyst estimates traced by Bloomberg. Consolidated revenue is likely to fall by a third to Rs 1,03,988 crore, while operating income is estimated to slip 16%.

The Singapore gross refining margin, the Asian benchmark for what refiner earns on processing every barrel of crude, averaged $6.46 a barrel during the quarter compared with $8.9 in the previous three months. The refinery is expected to report lower throughput given weak global demand for refined products.

Demand for petrol and diesel fell in April and a large part of May because of the Covid-19 lockdown. RIL, the owner of largest oil refinery in the world, is expected to have pushed higher exports during the quarter.

Improvement in petrochemical spreads sequentially due to weak feedstock prices is expected to partially offset decline in volumes. The company's petrochemicals products are largely consumed domestically.

Reliance Retail

Retail business’ earnings before interest, tax, depreciation and amortisation is expected to fall 30-50% sequentially due to lockdown during the quarter. Revenues will be hit as many stores remained closed. Electronics and fashions segment is expected to be impacted the most as people stay indoors amid the pandemic.

Reliance Jio

The effect of tariff hike in the fourth quarter will be fully visible in the three months through June. Reliance Jio had raised tariff in December along with peers.

According to BloombergQuint estimates, Reliance Jio's revenues are expected to rise 6.9% sequentially to Rs 15,859 crore. Its Ebitda is seen 10.3% higher at Rs 6,813 crore and net profit is expected to rise 11% to Rs 2,589 crore.

Reliance Jio’s Ebitda will be driven by addition of 5.3 million subscribers in the quarter ended June, and subsequent rise in average revenue per user at Rs 135.

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