Reliance Industries (RIL) shares fell in Tuesday's trade for the second day in a row, ahead of the oil-to-telecom major's quarterly results later this week. The Mukesh Ambani-led company is scheduled to report its quarterly and financial year results on Friday. Analysts expects RIL to report a muted set of quarterly results. That said, they largely remained positive on the stock's prospects.
During the quarter, the average crude oil prices declined 8 per cent sequentially to $81.40 per barrel. The steep decline was mainly seen in the second half of March due to recessionary fears surrounding the banking sector in the US and Europe, analysts said. On a closing basis, crude oil prices were at around $79.7 per barrel, down 6 per cent QoQ.
RIL Q4 results preview
JM Financial expects RIL to report a 0.3 per cent year-on-year (YoY) rise in consolidated net profit at Rs 16,250 crore in the March quarter compared with Rs 16,203 crore in the year-ago quarter. It sees sales for the quarter rising 3 per cent to Rs 2,13,553 crore from Rs 2,07,375 crore in the year-ago quarter. Ebitda margin is seen expanding 209 basis points to 17.2 per cent from 15.1 per cent YoY.
The brokerage expects Ebitda for digital segment to rise 3.1 per cent sequentially due to average revenue per user (ARPU) rising to Rs 179 from Rs 178 in December quarter and increase in net subscribers by 50 lakhs sequentially. It sees Retail Ebitda rising 5.1 per cent sequentially driven by rising store count and increase in footfalls. O2C Ebitda is seen rising 6.3 per cent QoQ due to higher refining margin of $11 per barrel.
Sharekhan sees Reliance's consolidated profit at Rs 16,960 crore, up 4.7 per cent. It sees sales for the quarter rising 3.1 per cent to Rs 2,13,734 crore. Operating profit margin is seen at 16.9 per cent, up 176 basis points YoY. Nuvama Institutional Equities pegs RIL profit at Rs 16,464 crore up 1.6 per cent YoY. It sees sales falling 3.3 per cent to Rs 2,00,454 crore. RIL may report 1.3 per cent YoY rise in profit at Rs 16,455 crore, said Kotak Institutional Equities. This brokerage sees sales at Rs 2,26,872 crore, up 9.4 per cent.
What to watch
Motilal Oswal Securities said further clarity on Rs 75,000 crore announcements in the new energy business, growth in retail store additions, and any pricing action in telecom segment would be key monitorables. ICICI Securities expects commentary on ARPU will be important.
RIL price targets, analyst views
Ahead of its quarterly results, RIL has a target of Rs 2,896, which suggests a 24 per cent upside potential for the stock ahead.
"We prefer RIL among downstream players given strong growth outlook for consumer-centric business (retail and Jio businesses), reasonable valuation and likely further value unlocking in digital and retail businesses would add to shareholders’ returns in the coming years. RIL is also favourable for investment given run-up to AGM," Sharekhan said.
JM Financial said it maintained its Buy rating on on RIL with a target of Rs 2,900 as the stock is closer to its bear-case valuation of Rs 2,000 per share, while it expects RIL’s EPS to grow at a strong 13-15 per cent CAGR over the next 3-5 years given its industry leading capabilities across businesses.
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