Reliance Industries to start FY23 with strong earnings, thanks to refining margins

• Analysts at brokerage firms like YES Securities, Motilal Oswal, HDFC Securities and Equirus believe that the oil-to-telecom giant will report a strong quarter earnings driven by refining, telecom and retail business.
• Jio is expected to see subscriber additions after three quarters of declines.
• Reliance Industries is scheduled to report its April-June quarter earnings tomorrow, July 22.

The stock markets which have been upbeat for the last two sessions may get another reason to celebrate as Mukesh Ambani-led Reliance Industries is expected to present a strong earnings report for April-June quarter, thanks to high crude prices.

So far in 2022, crude oil prices had gone up to $140 per barrel, the highest in 14 years after Russia invaded Ukraine. RIL, which has one of largest export oriented refineries in the region, has gained as gasoline cracks too have inched up with the crude in the last few months.

Some estimates say its net profit could swell by a large percentage. “PAT to grow by a healthy 74%, aided by strong performance in Reliance,” said analysts at YES Securities.

Telecom biz to see subscriber growth too

And, it’s not just the refining business that will bring in the moolah. Analysts at brokerage firms like Motilal Oswal, HDFC Securities and Equirus too believe that it will report a strong quarter across telecom and retail business too.

“RIL expected to report strong growth in earnings on both YoY and QoQ basis, backed by significantly stronger refining profitability, along with continued improvement in telecom ARPU,” said analysts at YES Securities.

Analysts at Equirus say, “Strong quarter led by robust performance in the refining segment. Jio ARPU's to increase on improved subscriber mix.”

While there could be sequential improvement in average revenue per user for Jio and continued growth in retail business, the petchem segment is likely to remain a drag, says as per HDFC Securities.

A high inflationary market has been impacting smartphone sales leading to low subscriber additions for telecom majors like Reliance Jio, Bharti Airtel and Vodafone Idea.

However, things are expected to turn slightly positive for Jio as analysts believe the telecom operator is set to add about six million subscribers after three quarters of decline.

“With smartphone shipments declining in April-May and channel inventory remaining high, data subscriber additions should also see a moderation. Only Jio’s results should reflect the impact of the tariff hike, as it has a high subscriber proportion on long duration recharges. With Jio’s subscriber clean-up complete, we estimate it to lead in subscriber additions, followed by Bharti,” said a report by Emkay Research.

Apart from the corporate earnings, investors are closely watching developments on the 5G spectrum auction that will determine future growth for these telecoms. Billionaire Mukesh Ambani has put down the highest of all -- ₹14,000 crore as earnest money for the 5G spectrum auction.

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