RIL Results Preview | Net profit likely to surge over 105% in Q1 on robust refining margins

Reliance Industries Limited is expected to report strong income for the quarter that ends in June, assisted by a sharp increase in dirty purification margins and strength in its organized retail business.

Department of Oil-to-Telecommunications is likely to report 105.7 percent in the year, and 56 percent in the quarter, increased consolidated net profit to RS 25,238.8 Crore on July 22, according to an average of five brokers surveyed by Money Control.

Large jumps in the bottom line will be driven from above because consolidated income is expected to increase 68.3 percent in the year and 13.6 percent in the quarter, becoming 2.4 Lakh Crore RS in the reporting quarter, according to Moneycontrol polls.

“Ril is expected to report strong growth in income based on yoy and qoq, supported by significantly stronger profitability of improvements, along with continuous improvement in ARPU telecommunications,” said the Brokest Yes Securities in the preview notes

Ril has benefited from substantial increases in purification products such as diesel and jet fuel during the June quarter after supply crunch in the European and US market.

EU and the US see a sharp decline in diesel and fuel jet inventory behind strong demand coupled with a decrease in supply after sanctions imposed on Russian oil exports.

Russia was approved by most developed countries after invading Ukraine in February in one of the biggest geopolitical crises that reached Europe since the second world war.

Singapore’s dirty purification margin jumped to record the highest of more than $ 25 per barrel in June to an average of around $ 18.7 per barrel over the three-month period ended in June.

Analysts estimate the average gross purification margin of $ 22 per barrel in the June quarter, double the level seen in the March quarter. Margin has developed at a faster speed, thanks to the processing of uranal crude oil reported from Russia and exports the same thing to Europe and the US.

Likewise, margin for diesel, gasoil and jet fuel average $ 42.1, $ 31.2 and $ 36 per barrel, respectively, during the June quarter, much higher than those in the March quarter.

The purification business is expected to be the main driver of income for conglomerates in the June quarter.

Retail Biz

In addition to purification, the company’s retail business is expected to continue to strengthen, with the company Box Equities company that expects operating profits to rise 9 percent in sequence driven by higher footsteps and additional shops in the quarter.

The first Covid-19 free quarter of operation must encourage growth in all retail business segments in sequence, bearing in mind that the year-to-year comparison will be tarnished by disorders caused by the second wave in the quarter of last year.

The telecommunications business under the Jio platform is expected to have a strong operational quarter even because the performance of the topline can be muted due to inflationary pressure in this sector.

Analysts estimate the average revenue of Reliance Jio per user rose 4 percent in sequence, the highest in this sector, behind around 3 percent of revenue growth.

Jio is expected to see the addition of users in this quarter after several quarters of the net loss because of his strategy to reduce the SIM that produces non-income.

Overall, the purification, telecommunications and upstream natural gas business is expected to encourage 79.4 percent in the year and 33.7 percent of the quarter increase in consolidated operating profit to RS 41,924.4 Crore, according to the Moneycontrol poll.

In addition to revenue, investors will wait for the company’s assessment of the current petrochemical industry margin, the demand for product purification and its views on the tariff increase in the telecommunications sector.