Reliance Industries Ltd. is slated to release its quarterly earnings on Friday. According to estimates, the oil-to-telecom company may announce a nil to 1.5 percent increase in earnings for the December quarter on the back of double-digit sales growth. Weakness in oil-to-chemical (O2C) due to moderation in diesel cracks, narrowing of the Russian crude discount, lower refining throughput due to maintenance shutdown, and continued weakness in petchem margin are expected to be offset by steady growth in consumer businesses, namely Reliance Jio Infocomm and Reliance Retail.

RIL Q3 Sales and Profit

Systematix Shares & Stocks anticipates RIL to record a 1.5% year-on-year increase in net profit of Rs 16,036.40 crore for the December quarter, compared to Rs 15,792 crore in the same quarter the previous year. It expects sales for the quarter to be Rs 2,43,625 crore, up 12.2 percent year on year from Rs 2,17,164 crore in the same period last year.

Prabhudas Lilladher expects unchanged profit at Rs 15,790 crore on a 10.2% increase in sales to Rs 2,39,270 crore.

Operating Performance

Prabhudas Lilladher believes RIL's operating performance will improve as its margins improve. This brokerage anticipates margin at 16.9 percent, up 62 basis points sequentially but down 81 basis points year on year. According to Systematix Shares & Stocks, the Ebitda margin will be 16.4%, up from 17.7% in September and 16.2% in the previous quarter.

In terms of Ebitda, "We predict consolidated Ebitda to fall 2% quarter on quarter (up 13% year on year). With weak refining/petchem and flat E&P (lower HPHT price offset by lower costs), we estimate standalone Ebitda to fall 9% quarter on quarter (up 16% year on year),' Kotak said.

Jio and Retail Enterprises

Emkay Global anticipates Jio to attract 1.05 crore subscribers, with a 0.5% increase in average revenue per user (ARPU) to Rs 182.50. According to BNP Paribas, sporting events will continue to drive data traffic growth, as will exanding fixed broadband connections.

"We have estimated a 1 per cent rise in ARPU to Rs 183.50 in the Jio telecom business while a strong 400 new retail outlets along with 8 per cent Ebitda margin at retail division in Q3FY24 vs 7.7 per cent in Q3FY23," the company said.

Kotak Institutional Equities anticipates Reliance Jio's Ebitda to gain 3.5% sequentially, driven by 1.2 crore total net additions, while blended ARPU would rise to Rs 183 from Rs 182 QoQ due to rising FTTH contribution. Reliance Retail expects Ebitda to improve by 6% QoQ, driven by larger store footprint, more footfalls, and the benefits of operating leverage.

O2C, Upstream Business Update

According to Kotak, E&P's EBIT would most likely be unchanged sequentially, despite an 18% drop in HPHT gas ceiling prices due to deceleration in opex from excessive levels in Q2 FY24. Analysts predict that lower gross refining margins (GRM) and petchem margins will result in a 12% drop in O2C earnings.

"We anticipate O2C Ebitda to remain flat YoY on weak refining (GRMs down 14 per cent YoY/43 per cent QoQ) and weak petchem demand offset by a 41 per cent YoY dip in ethane prices," Nuvama wrote in a note to investors. Prabhudas Lilladher projected the refining throughput at 17 mmtpa. "Petchem's profitability will fall quarter over quarter. "Refining margins are also expected to decline as Singapore's GRM falls," it stated.

Clarity on the Rs 75,000 Crore New Energy Business

Motilal Oswal Securities said investors will closely monitor any additional developments on Reliance Industries' anticipated Rs 75,000 crore investments in the new energy division. Furthermore, it believes that the expansion of retail stores, as well as any comments on pricing action in the telecom sector, would be closely monitored.