On April 22, Reliance Industries, led by billionaire Mukesh Ambani, will unveil its 4th quarter results for FY2023-24 and decide on dividend for FY24. The company’s telecom and retail establishments are expected to report strong revenue and operating valuations for the March period and a rebound in the O2C segment. This increase is likely to increase Gross Refinery Margins (GRMs).
Based on valuations by several brokerage firms and analysts on Dalal Street, high concern surrounds Reliance Industries’ net debt position.
Over the course of the next 3-5 years, the conglomerate anticipates experiencing a strong and consistent 14-15 percent compound annual growth rate in earnings per share (EPS) due to their top-tier capabilities throughout various industries.
Reliance Q4 Results Preview: Let’s take a look at the Q4FY24 estimates by leading brokerages of Reliance Industries-
Elara Capital: Reliance expects consolidated EBITDA growth of 11 percent for the year on the back of 4 percent growth in standalone EBITDA for its oil refining, petrochemical and mining activities, as well as 42 percent growth in its retail EBITDA.
Moreover, EBITDA is expected to grow by 11 percent for its digital services arm (specifically telecom). and 11 per cent growth in digital services’ (telecom) EBITDA. The brokerage expects revenue to come in at ₹2,32,627.3 crore, EBITDA at ₹42,523.4 crore, and net profit at ₹20,780 crore in Q4.
Equirus Capital: Equirus Capital predicts increased revenue from O2C to increase profitability and this will be sequential. Apart from steady gains from E&P, Jio and Retail are the distribution channels expected to deliver strong performance.
JM Financials: It is estimated that JM Financial’s financial report will show that Reliance’s fourth quarter EBITDA will grow by 3.6% (compared to the previous quarter) to ₹421 billion.
The growth is attributed to an 11.8% quarter-on-quarter boost in O2C EBITDA, supported by elevated GRM; Expected digital EBITDA is expected to grow by 2.6%. Marginal EBITDA is expected to remain relatively unchanged period-over-period, and E&P EBITDA is forecast to decline by 6.8% quarter-over-quarter.
Assumptions:
- Earnings before interest, tax, depreciation and amortization (EBITDA) from exploration and production (E&P) may decline by 6.8 percent to INR 5,400 crore. This decline is due to an increase in the percentage of profit shared with the government as stipulated in the Production Sharing Contract (PSC). Meanwhile, gas production and prices (estimated to be around $9.96 per million British thermal units in the second half of fiscal 2024) are not expected to increase or decrease significantly on a quarterly basis.
- O2C EBITDA to rise 11.8 per cent QoQ to ₹15,700 crore due to improvement in GRM to ~$11.2/bbl driven by improved diesel and petrol cracks; it was also aided by higher refining throughput though petchem margin is expected to remain subdued;
- We expect digital EBITDA to grow by 2.6% sequential quarter, driven by approximately 10.5 million new subscribers and a marginal increase in ARPU to ₹182.5 (from ₹181.7 in 3QFY24) to a total of ₹14,600 crore. These positive factors contributed to strong net connectivity.
- Retail EBITDA is likely to grow by only 0.4 per cent QoQ to ₹6,300 crore on a high base of 3QFY24 (on account of strong festive sales in 3QFY24)
ICICI Securities: According to ICICI Securities, Reliance is expected to experience a significant boost in its OTC earnings during the next quarter with an estimated QoQ increase of $1/bbl in GRMs.
The upcoming quarter will also see an improved pechem spread and higher refining throughput, although the refinery unit shut down during the third quarter. Additionally, RJio’s EBITDA is expected to grow by 2%, while RIL’s marginal EBITDA is expected to grow by 1.4% over the same period. Consolidated EBITDA may grow by 5% overall QoQ and net profit may reach 6% QoQ growth for Q4FY24E.
Motilal Oswal Financial Services: Expect consolidated EBITDA to remain flat YoY at ₹38,800 crore. Expect standalone EBITDA at ₹18,260 crore (up one per cent YoY). Expect production meant for sale at 17.1mmt (flat YoY). Expect EBITDA/mt at $91 (-10 per cent YoY). Further clarity on ₹75,000 crore announcements in the new energy business, growth in Retail store additions, and any pricing action in telecom are the key monitorable.
Read More- Reliance Q4 Results Preview
