Reliance Q1 earnings swing on refining despite Jio IPO focus
As investors focus on Jio Platforms' record IPO filing, Reliance Industries' first-quarter results will be dictated by whether its refining division successfully converted a global margin surge into profits despite maintenance shutdowns.
Global refining cracks soared in the June quarter, setting the stage for Reliance Industries' upcoming earnings release. Singapore gross refining margins hit $21.3 a barrel, up from $5.6 a year earlier, with diesel, gasoline and aviation fuel cracks jumping 263%, 152% and 342% respectively.
The question dominating analyst models is how much of this windfall reached the bottom line. A planned month-long shutdown at one of Reliance's four crude-distillation units, combined with fuel-retailing losses and higher operating costs, makes the oil-to-chemicals segment the key variable.
JPMorgan holds the most optimistic view, forecasting O2C EBITDA will jump 24% year-on-year and sequentially to ₹18,025 crore. This would lift consolidated EBITDA 12% from a year earlier to ₹48,115 crore. Jefferies and Citi project similar consolidated EBITDA growth of 10% and 11% year-on-year, respectively, with Citi estimating net profit at ₹19,098 crore.
Nomura offers a sharply different take, estimating O2C EBITDA rose just 4% annually to ₹15,020 crore. "Soft O2C and Retail, while Jio likely remained steady," Nomura said in its preview. The brokerage projects consolidated EBITDA growth of just 5% year-on-year to ₹44,860 crore, citing the turnaround's impact on volumes and increased refinery LPG production.
The telecom unit, which recently filed its draft red herring prospectus, is expected to provide steady but predictable growth. Nomura forecasts Jio Platforms' EBITDA rose 14% annually to ₹20,860 crore, supported by an eight-million subscriber increase to 532.4 million and a slight bump in average revenue per user to ₹217. The planned ₹35,000-40,000 crore share sale, which would be India's largest IPO, will use proceeds to prepay ₹27,500 crore in debt.
Reliance Retail is expected to post 11-12% revenue growth, though profitability continues to lag due to heavy investments in quick commerce. Nomura sees retail EBITDA falling 5% sequentially to ₹6,590 crore. Meanwhile, the upstream oil and gas segment is projected to be the weakest link, with brokerages estimating EBITDA declines of 13% to 21% on softer KG-D6 gas realisations.
