Reliance Q3 results tomorrow: O2C weakness may impact consolidated Ebitda sequentially: Jio, retail to see steady show

Reliance Industries will post its quarterly earnings report card on Friday. The expectations from Reliance Industries' consolidated December quarter performance remains a mixed bag with the Oil to Chemical (O2C) segment likely to see some pressure. The consumer-oriented retail and Jio (telecom segment) may see a steady quarter, and partially offset the  weakness in  Oil to Chemicals business. The operating performance on sequential basis may see some decline as per analysts estimates, though on year-on-year basis will still be higher. 

On refining margin front, the volatility continued during the October-December quarter. The benchmark Singapore GRM ( Gross refining margins ) declined to $5.6 a barrel during the 3QFY24 from $9.5 a barrel in 2QFY24. The Petchem margins trend also remained downward in 3QFY24. The Petchem prices declined 3% sequentially and 4% YoY in 3QFY24.

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“We expect consolidated Ebitda to decline 2% sequentially (up 13% year on year)”, said analysts at Kotak Institutional Equities in their Q3 preview. With weak refining and petchem, flat Exploration & Production (lower HPHT price, offset by lower costs), they expect standalone Ebitda to decline 9% sequentially (up 16% year-on-year). Ebitda stands for Earnings before interest tax depreciation and amortisation.

For telecom arm Reliance Jio, Kotak expects Ebitda to rise 4% sequentially (14% year-on -year). This as per them is to be driven by 12 million net subscriber additions and marginal ARPU uptick (average revenue per user) to Rs183 (versus Rs182 sequentially). For Retail, they expect the Ebitda to rise 5% sequentially (27% yoy) on increased footprint, operating leverage.

Motilal Oswal Financial Services also expects Ebitda for Reliance Industries to remain muted on sequential basis. They expect consolidated Ebitda of ₹411 billion (around ₹41,100 crore) to rise 17% YoY and flat sequentially. For standalone business they estimate Ebitda of ₹190 billion (up 26% YoY ,down 1% sequentially). For telecom arm Reliance Jio MOFSL estimates suggest ebitda to rise  11% YoY and 3% sequentially), while for the retail business they expect Ebitda rising 31% YoY and 7% sequentially. 

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Analysts at CLSA in their quarterly preview report also said that Reliance’s profit should decline 5% sequentially due to fall in O2C earnings, despite steady performance across other segments.

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