Q3FY23 Preview: Reliance Industries: Sales seen at Rs2,415,578 million, PAT at Rs156,635 million

19 Jan 2023 , 08:11 AM

Result date: 20^th January, 2023

Recommendation: Buy

Target price: Rs2,914

Reliance Industries (RIL) could witness weak performance in its O2C business, which could be offset by healthy show of the consumer facing businesses – Jio and Retail. Analysts at IIFL Capital Services expect RIL’s consolidated earnings to grow 15% sequentially, on the back of: 

• 6% sequential improvement in the O2C business – refining gains offsetting weakness in Petrochemicals; analysts at IIFL Capital Services expect the middle distillate cracks and complexity of the refining unit cushioning fall in Petchem earnings
• 10% sequential rise in E&P EBITDA on price hike of 26% QoQ
• Retail registering 5% sequential growth due to sales growth mainly, as EBITDA margins likely to remain broadly unchanged. 
• 5% sequential increase in Jio’s EBITDA. The quarter will also witness higher interest costs (INR depreciation + higher interest rates + higher borrowings). 

As compared to the year-ago quarter however, Profit After Tax (PAT) will fall 16%. 

Important management insights to watch out for:

• Further clarity on Rs750 billion investments in the new energy business
• Growth in Retail store additions
• Pricing action in Jio

 

Rs Million	December 2022 estimates
Sales	2,415,578
EBITDA	351,961
PAT	156,635

Source: IIFL Research