RIL Q2 Preview: Double-digit growth likely in revenue, profit; telecom and retail to drive business

The company’s Q2 revenue to grow to ₹2,28.1 bn and earnings before interest, taxes, depreciation and amortisation (EBITDA) is expected to follow to ₹1,14.35 bn.

Reliance Industries will report its September quarter earnings on October 21.

Overall revenues are expected at ₹22,992 crore, up 5.1% QoQ. EBITDA at ₹11,589 crore, is likely to grow 5.7% QoQ. Overall EBITDA margins are expected at 50.4%, up 30 bps QoQ and net profit at ₹4598 crore, up 6.1% QoQ.

However, on a sequential basis, the earnings will be marred by dismal performance of its mainstay oil-to-chemicals (O2C) business. This business makes for a little more than 70% of RIL’s consolidated topline, and contributes over 50% to the operating profit.

“Decline in GRMs is expected to lead to de-growth of 43% QoQ in O2C, EBITDA to ₹11,309 crore,” said brokerage ICICI Direct.

O2C business

RIL’s oil-to-chemical (O2C) vertical which is the largest contributor to the topline is expected to have been hit in the quarter. The brokerage estimate a decline of decline 20% QoQ to 31770 crore, mainly dragged by O2C segment.

“RIL’s consolidated EBITDA is estimated to decline 20% QoQ to 31770 crore, mainly dragged by O2C segment,” said ICICI Direct research.

RIL’s O2C business delivered its best-ever quarterly performance with all-time-high Revenue and EBITDA. Segment Revenues for 1Q FY23 increased by 56.7% yoy to ₹161,715 crore primarily on account of higher crude oil and product prices. Segment EBITDA for 1Q FY23 improved by 62.6% yoy to ₹19,888 crore primarily on account of sharp rise in transportation fuel cracks and better volumes.

Telecom and Retail

Reliance Retail and Reliance Jio Infocomm earning are likely to put on a good show.

“Reliance Jio (Jio), will lead sub addition with 7 mn net sub additions during Q2. The monthly ARPU, like peers, will witness growth, driven by higher no. of days and residual benefits of tariff hike, at 3% QoQ at ₹18,” said ICICI Direct.

Reliance Jio registered a net profit of ₹4,335 crore in the quarter ending June 30, 2022 (Q1FY22), while standalone revenue from operations came in at ₹21,873 crore in the quarter under review. In Q1FY23, the company’s value of services was at ₹25,725 crore

“We expect Reliance Retail to report strong operational performance in Q2FY23E with revenues increasing 40% YoY to ₹63795 crore (up 9% QoQ).Core retail revenues (excluding connectivity) is expected to increase 63% YoY (three-year CAGR: 18%) led by a strong recovery in the fashion and grocery segment,” said ICICI Direct.

Reliance Retail posted net profit for Q2 came at ₹2,061 crore, up 114.2% year-on-year. The business posted an Operating EBITDA of ₹3,897 crore, up 180.4% YoY.

On BSE, RIL shares closed at ₹2500.90 apiece up by or 0.18%.