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RIL Q3 result: Mukesh Ambani’s refining, petro biz may post muted numbers; this could offset weakness

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The weakness in Mukesh Ambani-led Reliance Industries’ refining and petrochemical business is expected to be offset by gains made by Jio telecom and retail segment in the December quarter of FY20, analysts said. RIL is expected to clock in consolidated revenue of Rs 1.45 lakh crore and net profit of Rs 11,435 crore for the fiscal this quarter, according to a Bloomberg poll. The company is scheduled to report its results in the later part of the day today. In Q2FY19, the company posted a consolidated net profit of Rs 10,251 crore and revenue of Rs 1.71 lakh crore.

The oil-to-telecom conglomerate in August 2019 had announced a plan to sell a 20 per cent stake in its chemicals and refining business to Saudi Aramco in a deal valued at $15 billion to cut debt. According to a CNBC TV-18 poll, the net profit is expected to come in around Rs 11,333 crore while revenue is expected to cross the Rs 1.50 lakh crore mark in the December quarter of 2019. For Reliance Jio, the same poll estimates show that net profit to expected to come in at around Rs 1,500 crore.

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"RIL is expected to deliver muted growth especially because of weakness from the petchem and refinery businesses which should be offset by the stupendous growth from the telecom and retail segments. Since, the petchem spreads and refining margins have been collapsing, the core businesses of this ~10Lakh Cr Market cap group should report lackluster growth. We feel that the supply glut in the market added pressure on the petchem margins while the GRMs are also expected to marginally decline to $9.2/bbl," Nirali Shah, Senior Research Analyst, Samco Securities said.

"Consumer business will drive growth this quarter as they benefitted from the favorable festive season. Numbers in Jio will also be healthy due to tariff hikes. A muted PAT growth of around 8-9% is expected compared to last year which may not surprise the Street," she added.

Net profit of Rs 990 crore was posted by Reliance Jio in the September quarter, on account of an increase in the number of data subscribers. Reliance Jio has become the largest telecom player with 36.9 crore mobile subscribers in November 2019, according to the latest data by TRAI. Vodafone Idea reported a total mobile subscriber base of 33.62 crore and Bharti Airtel at 32.73 crore customers for November 2019.

"We forecast RIL's reported GRM's to be flattish, sequentially, at $9.4 per barrel and this would imply record premiums over the Singapore benchmark. But most of the premium would be because of fuel oil," analysts at JP Morgan said in a note. The retail and telecom segment may show better performance, other analysts said. Meanwhile, RIL shares were trading at Rs 1,566.60, up 28.70, or 1.87 per cent on NSE.