RIL Q1 profit may drop in double digits. What analysts say on most-valued stock

Reliance Industries Ltd (RIL) could report a double-digit drop in net profit for the June quarter, analysts said, even as they kept faith in fact on the most valued stock on the Dalal Street.

Kotak Institutional Equities expects consolidated profit for the oil-to-telecom major to drop 14 per cent year-on-year (YoY) to Rs 15,417.70 crore for the June quarter compared with Rs 17,955 crore in the corresponding quarter last year. Consolidated sales for RIL is seen falling 4 per cent to Rs 2,09,771 crore compared with Rs 2,19,304 crore YoY.

For RJio, the brokerage expects Ebitda to rise 15 per cent YoY (3 per cent QoQ) driven by 90 lakh overall net addition and a marginal increase in ARPU to Rs 181 from Rs 179 in the March quarter. For retail, Kotak sees Ebitda to grow 16 per cent YoY (3 per cent QoQ) on increased store footprint.

In the case of O2C, Ebitda would likely decline 8 per cent, sequentially on auto fuel over-recoveries, Kotak said.

"We expect consolidated Ebitda to decline 2 per cent QoQ, as benefits of fuel over-recoveries in O2C, and QoQ improvements in Jio and Retail would likely offset sequentially weaker refining margin," it said.

BofA Securities, on the other hand, sees consolidated profit at Rs 16,160 crore, down 10 per cent.

On a sequential basis, Prabhudas Lilladher said refining throughput may come in at 17 MTPA against 17.1 mt in March quarter. Petchem profitability will improve sequentially, due to demand recovery post China reopening. It expects Jio to show steady performance sequentially (2.9 per cent QoQ revenue growth and 1.5 per cent QoQ ARPU hike), while retail segment profitability should be resilient.

On a standalone basis, this brokerage sees adjusted profit for RIL falling 24.5 per cent YoY to Rs 11,394 crore from Rs 15,096 crore in the year-ago quarter. Prabhudas Lilladher sees standalone sales at Rs 1,16,904 crore compared wih Rs 1,51,343 crore YoY.

"Earnings to decrease QoQ due to lower GRMs but recovery in Petchem to make up. Jio and retail performance will be steady,” it said.

Stock view

Shares of RIL are up 1 per cent year-to-date against a 7 per cent rise in the BSE Sensex. BofA Securities said RIL offers a favourable risk-reward, especially as one heads into its annual general meeting (AGM). The foreign brokerage said RIL has, in the past, made key announcements on value unlocking catalysts and also future growth plans at its AGMs. It expects similar announcements this year, especially around Jio Financial Services (JFS), clean energy and digital business.

Shares of RIL have historically outperformed going into the AGM on most instances, the foreign brokerage noted while suggesting a target of Rs 2775 on the stock. Kotak Institutional Equities finds Rs 2,800 as fair value fo RIL stock. Prabhudas Lilladher finds the stock worth Rs 2,822.

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