RIL’s Q3 to Be Mixed: Muted Growth Seen in O2C, Robust Performance Expected for Retail and Jio


  • An average brokerage estimate pegs Reliance’s consolidated net profit at ₹15,201 crore in Q3 FY23, down 18% year-on-year from ₹18,549 crore in Q3 FY22.
  • Reliance’s consumer businesses, retail and Jio, are expected to boost the conglomerate’s earnings in the third quarter.
  • While the retail and Jio segments are expected to report a year-over-year increase in earnings before interest, taxes, depreciation and amortization (EBITDA), the oil segment is expected to report a decline.
  • Among the key aspects to watch out for during Reliance’s Q3 earnings are developments in the company’s ₹75,000 crore new energy ambitions, telecom tariff increases and store additions in the retail segment.

Reliance Industries’ December quarter led by Mukesh Ambani is expected to be a mixed bag with weak performance from the oil-to-chemicals (O2C) business likely to negatively impact a good showing expected from the consumer-focused retail sector. and telecom segments.

An average brokerage estimate pegs Reliance’s consolidated net profit at ₹15,201 crore in Q3 FY23, down 18% year-on-year from ₹18,549 crore in Q3 FY22.

On the other hand, revenue is expected to grow at 15% YoY to ₹2.13 lakh crore in Q3 FY23 from ₹1.85 lakh crore in Q3 FY22, according to average analyst estimates.

“We expect Reliance Industries to report a 6% quarter-over-quarter increase in earnings before interest, taxes, depreciation and amortization (EBITDA) as Oil-to-Chemicals improved on lower excise taxes and strength in consumer segments,” said Jefferies. .

Brokerage Turnover (estimate) Net profit (estimate)
UBS ₹2.23L Crore ₹15,100 crore
Nomura AFTER ₹14,720 crore
Motilal Oswal £2.16 crore ₹13,700 crore
Jefferies AFTER ₹15,215 crore
ICICI Direct ₹2L crore ₹17,268 crore
Average £2.13 crore ₹ 15201 crore


O2C margins remain under pressure

Petrochemical refining margins weakened to multi-year lows on weak demand prospects and falling crude oil prices in the October to December period. Singaporean gas cracks fell from $7 in Q2 to $6 a barrel in Q3.

“Benchmark Asian Complex refining margins fell quarter-on-quarter to $6 a barrel in Q3 (Q2 FY23: $7 a barrel) as rising Chinese exports weighed on spreads even as global diesel inventories remained low,” said a report. from Jefferies.

This segment, which accounts for 60% of RIL’s revenues, is expected to drag down the conglomerate’s performance.

O2C segment EBITDA is expected to decline 5% YoY to ₹12,893 crore, according to Jefferies.

However, some relief has come from the government, which has reduced the windfall it levied on domestic oil and gas producers in July. Since the taxes are directly linked to global crude oil prices, it will bring little relief to the margins of RIL, which imports crude oil and exports refined products. Sequentially, however, it can have an impact.

Analysts at Nomura peg Reliance’s refining margins in Q3 at $10, an improvement from $8.9 in Q2. Crude oil windfalls were softened from ₹23,260 per ton in July 2022 when it was introduced, to ₹1,900 per ton now.

Festive cheer from the retail segment

As Dmart’s margins fell to a multi-year low in its third-quarter earnings announced last week, analysts expect a good showing from Reliance Retail, supported by holiday performance in the fashion and grocery segments.

In addition to festive demand, store expansions are also expected to boost segment EBITDA – broker estimates put sequential growth at between 8-10%.

According to Jefferies, the EBITDA of this segment is expected to report year-over-year growth of 27% at ₹4,857 crore.

Analysts say that Jio’s average revenue per user (ARPU) could improve with a modest sequential increase of 1.8% to ₹179-180. Most brokers also believe that the telecom’s net subscriber base for the quarter is around 5-8 million.

Jefferies expects Jio’s EBITDA to increase 24% year-over-year to ₹12,636 crore.

What to look out for: New energy, telecom rate increases, and store additions

Among the key announcements to look out for in Reliance’s Q3 earnings are clarity on the company’s new energy business of ₹75,000 crore, increases in telecom tariffs and retail additions.

Now that the government has approved the Green Hydrogen mission to develop a capacity of 5 million tonnes by 2030, along with an associated addition of 125 gigawatts of renewable energy, developments in Reliance’s green energy ambitions will be one of the key aspects are to watch out for.

Aside from this, the long-awaited rate hikes in the telecom segment will also be worth looking forward to, especially now that Jio has rolled out 5G in 134 cities across the country.

Finally, developments in the conglomerate’s retail business, including store expansions and plans to integrate Metro Cash & Carry, will be one of the most important things to look forward to. In December, Reliance’s retail arm Reliance Retail Ventures said it had agreed to acquire Metro Cash & Carry for ₹2,850 crore.


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