RIL Q1 results, dividend: Consumer-facing segments may do well, O2C a drag

Oil-to-chemical (O2C) sector results for the June quarter of Reliance Industries are expected to be negatively impacted, with its year-over-year (YoY) earnings expected to fall anywhere between 8% and 17% on a YoY decline in sales. According to estimates, profit could decline even further sequentially as sluggish O2C revenue could counteract moderate increase in the telecom and retail sectors. Since Jio Financial Services (JFS) is expected to list sooner than Piramal Pharma (45 days) and NMDC Steel (4 months), everyone will be watching the management commentary on segment performance and any hints regarding this listing.

Elara Securities anticipates RIL to post a 6% YoY increase in Ebitda, driven by a 3% increase in retail and a 12% increase in digital services (telecom), albeit this will be partially offset by a standalone Ebitda decline of 15% YoY (mainly in Q2C). According to this firm, the gross refining margin will drop 52% YoY to $16 per barrel.

On a sequential basis, a 9% decline in O2C Ebitda (which contributed 37% of RIL's Ebitda) would have a negative effect because of decreased gross refining margin and inventory losses. While upstream industry Ebitda is anticipated to be steady, the retail and Jio businesses are anticipated to rise marginally (4%/2% QoQ). In Q1 FY23, ARPU was Rs 178.80; in Q1 FY23, it is anticipated to increase to Rs 180.60, according to Systematix Institutional Equities.

Average revenue per user, or ARPU.

In terms of top and bottom lines, Kotak Institutional Equities anticipates that RIL's consolidated earnings will decline 14% year over year (YoY) to Rs 15,417.70 crore for the June quarter from Rs 17,955 crore in the same quarter last year. RIL's total sales are expected to decline 4% to Rs 2,09,771 crore from Rs 2,19,304 crore year over year.

This brokerage anticipates RJio's Ebitda to expand 15% YoY (3% QoQ), powered by a net addition of 90 lakh overall and a slight improvement in ARPU to Rs 181 from Rs 179 in the March quarter. Kotak anticipates retail Ebitda to climb 16% YoY and 3% QoQ due to an expansion of store footprint. According to Kotak, Ebitda for O2C will likely decrease by 8% sequentially due to auto fuel over-recoveries.

JM Financial estimates Rs 15,764.90 crore in profits for the huge oil-to-telecom company, a 12.2% YoY decline. Sales are expected to total Rs 2,13,471 crore, a 2.7% YoY decline.

As RIL announced Force Majeure on exports from the Sikka port due to the Biparjoy cyclone, which was somewhat offset by higher petchem spreads, Nomura said it anticipated refining margins falling to $10 per barrel from $12 per barrel last quarter and reduced export volumes. It estimates RIL's Q1 consolidated earnings at Rs 14,990 crore, down 17% YoY, on a year-over-year basis. Consolidated sales are down 8% year over year at Rs 2,01,530 crore.

Nomura India forecasts Jio's Ebitda to expand 3.5% sequentially to Rs 12,600 crore for its consumer-facing business, powered by strong subscriber additions of 75 lakh and a slight increase in average revenue per user (ARPU) to Rs 181.50. It anticipates that RIL's retail segment Ebitda will increase sequentially by 6% to Rs 5,000 crore, driven by a quick pace of store openings and increasing foot traffic.

"We estimate RIL's 1QFY24F consolidated Ebitda to moderate 1 per cent sequentially to Rs 38,000 crore, as a healthy performance across both its consumer businesses and upstream will likely be offset by the O2C (Oil to Chemicals) business underpinned by lower refining margins," the report stated.

BofA Securities, on the other hand, reports a 10% decrease in consolidated earnings to Rs 16,160 crore.

According to Prabhudas Lilladher, the refining throughput may be 17 MTPA as opposed to 17.1 MT in the March quarter. Petchem profitability will increase sequentially as a result of the rebound in demand following China's reopening. It anticipates sustained sequential performance from Jio (2.9% QoQ revenue growth and a 1.5% QoQ increase in ARPU), with retail sector profitability being stable.

Reliance Industries, however, would also take today's dividend payout suggestion under consideration.