Reliance Industries outlook: Experts estimate that the company’s consolidated operating and net profit may see single digit growth on a quarter-on-quarter basis in the March quarter, but analysts also believe that the energy business will play an important role in the company’s earnings upgrade going forward. Experts also believe that the company may not get the full benefit of the changes in the global energy market in the last 6 weeks after Russia’s invasion of Ukraine, but its impact on the company’s oil and chemical business is to be seen in the coming quarters. Will get
Significantly, after Russia’s attack on Ukraine, America and all Western countries have imposed various types of sanctions on Russia, due to which the global energy market has undergone rapid changes during the last 6 weeks. There has been a huge increase in the prices of crude oil due to supply related problems all over the world. The demand for crude oil has been strong but its supply has decreased.
The changed conditions after Russia’s invasion of Ukraine have seen an increase in diesel fuel and jet fuel margins around the world. Experts believe that this will be beneficial for Reliance Industries. Because its refineries do a lot of work on these two fuels.
In the December quarter, Morgan Stanley had said that RIL’s refining margin at $9.5 per barrel is likely to come down to $10.5 per barrel in the March quarter. Morgan Stanley said in a note issued on April 6 that we still believe that the energy market will continue to remain strong and the company’s EPS will increase by more than 10 percent.
According to a recent note issued by brokerage firm CLSA, Singapore gross refining margins have risen on a month-on-month basis to $9.7 per barrel from $2.4 per barrel in March. CLSA further said in its report that future market conditions indicate that Asian gross refining margins are likely to double digit in the next 12 months due to higher spreads of gasoline, diesel and jet fuel and could range from $12 to $13. per barrel level.
Experts say that such an increase in refining margin augurs well for RIL’s oil to chemical business. Explain that the contribution of its oil to chemical business in the company’s income is more than 60 percent. This segment of the company accounts for a large proportion of its consolidated operating profit.
How will the pace of digital and retail business be
Experts say that the company’s digital and retail business may see stability going forward. However, in the fourth quarter, the impact of rising inflation can be seen on the company’s consumer retail business. Experts also say that both offline and online retail business of the company can benefit from the opening of the economy in the March quarter.
Apart from this, the effect of opening of new stores in this period can also affect the retail business. But despite this, analysts believe that the operating performance of the company’s retail business may remain sluggish in the fourth quarter.
Q4 Results: Demand outlook of IT companies expected to be better, margins may be under pressure
BofA Securities said that despite strong revenues, we expect the EBITDA margin of the company’s retail business to remain flat at 6.6 per cent due to inflationary pressures and increased competition. Jefferies also says that due to the increasing pressure of inflation, the recovery of retail business may appear to be slowing down.
Looking at the company’s digital and telecom business, it has recently taken steps to reduce the high cost of its idle users and network. Its effect can be seen in the future.
BofA Securities says that there is no possibility of any major decline in the subscriber base of the company’s telecom business in 2022-23. The effect of the recent increase in tariff will be seen on the company’s ARUP going forward.
Overall, BofA Securities believes that the consolidated earnings of the company may see a growth of 14.2 percent on a quarterly basis in the fourth quarter and remain at Rs 2.1 lakh crore. At the same time, the company’s net profit can reach Rs 19,500 crore with a growth of 5 per cent in the same period.
(Disclaimer: Network 18 Media & Investment Ltd. is owned by Independent Media Trust. Its beneficiary company is Reliance Industries.)
The views expressed on moneycontrol.com are the personal views of the experts. Website or management is not responsible for this. Money Control advises users to consult a certified expert before taking any investment decision.