Reliance Industries shares: As stock lags Sensex, can Q4 results set stage for recovery?

Reliance Industries (RIL), which has lagged Sensex in 2023 so far, is likely to report a flattish March quarter profit on a single digit YoY growth in sales. Analysts 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 would be the key monitorables for the RIL stock going ahead.

The stock slipped 9 per cent in 2023 so far against a 2 per cent drop in the BSE Sensex during the same period. The average target price on the stock at Rs 2,896, as per Trendlyne, suggests a potential 29 per cent upside on the counter.

Kotak Institutional Equities expects the oil-to-telecom major, to report 3 per cent YoY rise in consolidated net profit at Rs 16,700 crore compared with Rs 16,203 crore in the year-ago quarter. It sees sales rising 9 per cent YoY to Rs 2,26,872 crore from Rs 2,07,375 crore YoY.

Emkay Global sees 0.3 per cent drop in profit at Rs 16,148 crore. It sees sales rising 5.8 per cent YoY to Rs 2,19,311 crore. Ebitda margin is seen coming in at 16.8 per cent, an expansion of 166 basis points over 15.1 per cent in the year-ago quarter.

Motilal Oswal also sees a 0.3 per cent de-growth in profit at Rs 16,200 crore. It sees sales rising 0.8 per cent YoY to Rs 2,08,900 crore.

"We estimate RIL’s consolidated Ebitda to increase 4 per cent QoQ to Rs 36,800 crore, with O2C Ebitda up 8 per cent at Rs 15,000 crore on recovering petchem margins and steady GRMs, amid falling energy costs. For Jio, we expect net subscriber addition of 55 lakh, with a 1 per cent rise in ARPU at Rs 179," Emkay Global said.

This brokerage sees reported retail Ebitda rising 5 per cent QoQ to Rs5000 crore and upstream Ebitda by 2 per cent QoQ on better gas volumes. It sees consolidated adjusted PAT after the JPL-RRVL minority interest to rise 2 per cent QoQ to Rs 16,100 crore. Interest cost should jump 12 per cent to Rs 5,800 crore QoQ, it said.

Kotak Institutional Equities sees better sequential earnings in all key segments.

On a sequential basis, it expects RIL’s consolidated Ebitda to increase 4 per cent QoQ and 16 per cent YoY. In O2C, refining margins remained resilient; the impact of windfall tax should be further reduced, and there would be marginal recovery in petchem, the brokearge said.

"We expect standalone Ebitda to increase 7 per cent QoQ (10 per cent YoY). For Jio, we estimate Ebitda to rise 2 per cent QoQ (16 per cent YoY), driven by higher net adds and QoQ stable APRU at Rs 178. For Retail, we expect Ebitda to grow 2 per cent QoQ (on festive quarter) and 19 per cent YoY," it said.

RIL is yet to announce its results date. JM Financial and Kotak Institutional Equities have a price target of Rs 2,900 on the stock; JP Morgan finds it worth Rs 2,960, Nomura India sees it at Rs 2,850 while Jefferies has a target of Rs 3,100 for the stock.

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