Mukesh Ambani, billionaire and chairman and managing director of Reliance Industries Ltd., at the World Economic Forum in Davos. (Photographer: Simon Dawson/Bloomberg)

Q4 Earnings: Reliance Industries’ Profit To Fall First Time In 17 Quarters

The net profit of India’s most valuable company is expected to decline for the first time in nearly four years.

Reliance Industries Ltd.’s standalone net profit for the quarter ended March would fall by nearly 5 percent over the previous quarter—a first in nearly 17 quarters—according to data compiled by BloombergQuint. That will be largely because of lower gross refining and petrochemical product margins.

The Singapore gross refining margin, the Asian benchmark, remained depressed in the March-ended quarter due to excess inventory and lower demand. Prices of petrochemical products, too, remained low due to short-term oversupply.

The refining segment of Mukesh Ambani-controlled company will be impacted due to lower GRMs and volumes due to a plant shutdown. The petrochemical segment—which has been its star performer—will slow for the first time in eight quarters due to weak pricing environment. Reliance’s earnings before interest and tax from petrochemical division for the last eight quarters grew due to higher volumes.

However, the overall earnings of the oil-to-telecom conglomerate is expected to be largely stable as higher contribution from its telecom and retail divisions will offset the lower energy segment earnings. The interest cost is also expected to be flat compared with the last quarter due to a stronger rupee.

Reliance Jio Infocomm Ltd. is expected to benefit from stronger subscriber addition. However, the revenue growth which is aided by subscriber additions is coming at the cost of average revenue per user.

(The estimates are based on forecasts by multiple brokerages including CLSA, JPMorgan and Morgan Stanley and Deutsche Bank)