- Refining margins have been muted last few months due to the fall in demand for oil products.
- Oil product demand growth stalled to nearly zero and there is oversupply of gasoline and naphtha, Morgan Stanley said.
- Petrochemicals are the biggest contributor to Reliance Industries' turnover and profits.
- However, the increasing traction for its telecom vertical Jio as well as the retail business may provide some relief.
Refining margins have been muted last few months due to the fall in demand for oil products. And that is bad news for Reliance Industries, which will announce its quarterly earnings on Friday, where petrochemicals is the biggest contributor to the company's revenue and profit.
However, the increasing traction for its telecom vertical Jio as well as the retail business may provide some relief to Chairman Mukesh Ambani, who has often said in the recent past that "data is the new oil".
Oil product demand growth stalled to nearly zero and there is oversupply of gasoline and naphtha, Morgan Stanley said in a report on July 10.
According to research firm CGSCIMB, margins from petrochemicals have dropped sharply since April 2019 and the decline has been sharpest in paraxylene, which has flowed through across the polyester chain. That would mean the decline in profit would be pronounced in Reliance mainstay business, the report added.
However, Jio and Reliance Retail may come to the rescue, at least partially.