RIL Q1 results preview: COVID-19 second wave may impact performance; what to expect

Mukesh Ambani-owned Reliance Industries Ltd. (RIL) is expected to take a hit on its first-quarter earnings due to the impact of the second wave of COVID-19 across its businesses. 

The oil-to-telecom conglomerate is set to announce its Q1FY22 results on Friday. The company's consolidated net profit is expected to dip by over 10%, both sequentially and over the previous year, to Rs 11,889.8 crore in April-June quarter, according to the average of analysts' estimates compiled by Bloomberg. 

RIL's consolidated revenue is estimated to dip 2% quarter-on-quarter but leap 66% over the year-ago-period, whereas its operating income is likely to fall 11.8% sequentially but jump 10.3% year-on-year.

Oil-to-Chemicals

The consumption of petroleum products in the country fell 10.4% over the prior quarter, with aviation turbine fuel (ATF) seeing the biggest fall of over 30%, according to data released by the Petroleum Planning & Analysis Cell. 

Meanwhile, petrol and diesel demand shrank by 13.2% and 10.5%, respectively, in the first quarter.

But the operating profit of RIL's O2C segment is likely to rise sequentially on account of better refining and petrochemical margins. RIL's refining segment will improve by virtue of inventory gains and a recovery in gasoline and jet fuel spreads, the report added. 

Besides, the Brent crude also averaged at $69.1 a barrel in the said period, an increase of 13% over the preceding three months.

Reliance Jio

RIL's telecom unit is expected to report an increase in its revenue in the first quarter, backed by fibre-to-the home and wireless subscriber additions, as well as continued traction for JioPhone. 

However, lower recharges, according to the report, during the second COVID-19-induced lockdown may hurt its average revenue per user (ARPU). 

Reliance Jio's net profit is likely to fall due to recognition of amortisation and interest cost on Rs 57,100 crore spectrum acquired in March 2021 auction, according to ICICI securities. 

Motilal Oswal estimates the carrier's EBITDA (earnings before interest, tax, depreciation and amortisation) to arrive at Rs 8,300 crore, flat over the preceding three months but an increase of 18% YoY.

Reliance Retail

The retail unit of RIL is expected to see a decline in its EBITDA as consumer spends fell and fewer stores operated in view of curbs due to the COVID-19 pandemic's second wave. 

Kotak Securities assesses retail Reliance Retail's EBITD to drop 35% sequentially to Rs 2,010 crore.