Reliance Industries Q1 Preview: RIL’s Profit Seen Falling As Covid-19 Hurt Demand For Oil, Retail Units


India’s consumption of petroleum products fell 10.4% over the preceding quarter, with aviation turbine fuel witnessing the biggest drop of more than 30%, data released by the Petroleum Planning & Analysis Cell showed. Petrol and diesel demand contracted 13.2% and 10.5%, respectively, in the first quarter.

But the operating profit for RIL’s O2C segment is expected to rise sequentially on better refining and petrochemical margins.

RIL’s refining segment will improve on account of inventory gains and a recovery in gasoline and jet fuel spreads. The benchmark Singapore GRM rose 16.7% sequentially to $2.1 a barrel in the first quarter. Also, the Brent crude averaged at $69.1 a barrel in the reported period, up 13% over the preceding three months.

Petrol, diesel, and jet fuel spreads jumped 44%, 13%, and 36%, respectively, over the previous quarter.

Besides, the company’s petrochemicals segment is likely to stay healthy even as key polymer spreads soften from multi-quarter highs. Polyethylene, polypropylene and polyvinyl chloride naphtha spreads, according to Kotak Securities, have seen a year-on-year growth of 14-75% in the first quarter against a 52-108% jump in the preceding three months.

The performance of the upstream segment, Kotak Securities said, will be driven by a sharp sequential increase in gas volumes, reflecting higher production from R-cluster and incremental volumes from satellite fields.

Reliance Jio

Mukesh Ambani’s telecom unit is expected to witness a rise in revenue in the first quarter, aided by wireless and fibre-to-the-home subscriber additions, and continued traction for JioPhone.

But lower recharges during the second Covid wave lockdown are likely to hurt its average revenue per user.

The carrier’s net profit, according to ICICI Securities, may also decline on account of recognition of amortisation and interest cost on Rs 57,100-crore spectrum bought in March 2021 auction.

Motilal Oswal expects Reliance Jio’s Ebitda to come in at Rs 8,300 crore, flat over the preceding three months but a rise of 18% year-on-year.

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