Reliance Industries could see an earnings boost driven by its three pillars — refining, retail and telecom

• Analysts believe that Mukesh Ambani’s Reliance Industries could end the financial year 2021-22 on a high.
• A continuation in the earnings upcycle is expected as chemical prices are rising, broadband subscribers are picking up, online retail gains traction and new energy investment picks up steam.
• Shares of RIL have gained nearly 10%, outperforming benchmark index Sensex that tumbled nearly 6% so far in 2022.
• The stock will remain in focus as investors await the firm’s March quarter earnings that is scheduled on May 6, Friday.

Reliance Industries could bring cheer to its investors with the March earnings scheduled to be announced later today (May 6) as analysts believe the Mukesh Ambani-led company is looking at growth in three of its key businesses — refining, retail and telecom.

Reliance Industries’ shares will be in focus as investors await the firm’s March quarter earnings that is scheduled on May 6, Friday.

Reliance Industries could see earnings upcycle as chemical prices are rising, broadband subscribers are picking up, online retail gains traction and new energy investment picks up, according to a report by Morgan Stanley as it states “an earnings upgrade cycle is taking hold and is key to reversing RIL's past year of underperformance.”

Analysts at Yes Securities second the views as they say Reliance Industries is expected to report improvement in its earnings — on both quarterly and annual basis — on account of stronger refining margins. The revenue, however, would face a partial offset due to weaker margins in petrochemicals.

Also read: https://www.businessinsider.in/business/telecom/news/reliance-jio-could-post-a-blockbuster-5000-crore-profit-in-the-march-quarter-say-analysts/articleshow/91316654.cms

Retail and telecom to drive Reliance’ growth, with refining gains offset by rising crude oil prices

This would be the seventh quarter of sequential improvement in Reliance’ earnings. In the March quarter, refining and telecom are expected to drive growth with some offsets from the petrochem side, say analysts.

In fact, Reliance Jio could post a blockbuster ₹5,000 crore profit in the March 2022 quarter. Analysts are gung-ho about the telecom sector’s performance in the March 2022 quarter.

Analysts say that the telecom segment is expected to benefit from higher average revenue per user (ARPU) realisation whereas the retail segment would reap the benefits of sales traction driven by growth in network. Notably, RIL has invested more than $1 billion in acquiring assets and building capabilities of Reliance Retail.

Also read: https://www.businessinsider.in/retail/news/reliance-industries-retail-business-could-reach-new-heights-all-thanks-to-increased-investments-and-muted-covid-wave/articleshow/91312838.cms

“With rising penetration and market share wins ahead in consumer businesses (telecom tech and retail), we see the medium term growth story remaining intact as well,” said Goldman Sachs.

Besides, recently the stock has been rising on hopes of its new hydrogen energy segment.

Reliance best positioned to capitalise on hydrogen (new energy) segment

Global investment banking firm Morgan Stanley expects the hydrogen segment of RIL to contribute 10% to its earnings with a net asset value of $10 billion by the end of this decade (by 2030).

Analysts at Morgan Stanley believe hydrogen adoption plans are quickly progressing in India in line with global peers, which makes RIL best positioned to capitalise on this segment.

“For RIL, strong cash flow generation in the best in class old energy business (low cost structure and highest complexity) can fund the capex of the New Energy business and in turn drive one of the fastest and most profitable net zero transitions by 2035 amongst large energy companies, on our analysis,” said analysts at Goldman Sachs.



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