Reliance Industries may report tepid Q4 results, subscriber churn to continue at JIO, eyes on energy biz
时间:2024-06-26 15:51:57 阅读(143)
Mukesh Ambani’s Reliance Industries Ltd (RIL) may report sombre earnings for January-March quarter earnings due to a drag on its telecom business, shifting investor focus back on the energy vertical – the company’s traditional mainstay. The energy business could have come to the rescue for RIL in the fiscal fourth quarter, with refinery margins doubling on the back of tighter energy markets, said analysts at Morgan Stanley. The multi-year earnings upgrade cycle is still fully in play, according to analysts who have RIL stock as their top pick with a target price of Rs 2,926 per share, up 10.8% from Thursday’s closing price of Rs 2,640.75per share.
Sombre earnings growth expected
Goldman Sachs is a tad more bullish in its estimates, pinning at 7% on-quarter growth in EBITDA. “This would be the seventh quarter of sequential improvement. In the current quarter refining and telecom would drive growth with some offsets from petchem. Telecom will see benefits from the tariff hike towards the end of last quarter while refining will see tailwinds from a significant improvement in March which would persist next quarter as Well,” they said. The brokerage firm has a target price of Rs 3,200 per share on RIL.
Morgan Stanley Estimates
Net profit is estimated to grow 28.6% on-year, but only 3.9% from the previous quarter.Net revenue may improve 32.8% from the previous year and 7.5% sequentially.EBITDA Margins are expected to slip 0.7% on-year basis and 2.6% when compared to the previous quarter.Higher net finance costs due to the depreciation of the rupee and RIL’s refinancing debt may lead to slower profitability growth.In the digital and telecom segment, Morgan Stanley estimates subscriber churn to have continued in the January-March quarter with a 4 million net reduction in subscribers, adding to nearly 150 million churns over the past six quarters. “We still expect another 5% rise in ARPUs in the first quarter of the current fiscal year and fully reflect the tariff hike,” analysts said. Overall telecom EBITDA for the digital business should rise by 5% sequentially and 21% on year.
Eyes on energy
“January-March quarter most of 2022 we believe will shift the spotlight back on the energy vertical with investor perception reversing as refining, chemicals and upstream gas lead the way for earnings and NAV upgrades,” Morgan Stanley said. They added that the bygone quarter was a quarter of two halves where the first half saw significant margin pressure in chemicals with oil price spike and stable refinery margins. Energy markets saw tightness since the middle of February which drove refinery margins to double by end-March and chemical prices caught up with higher oil prices, leading to above mid-cycle margins.
What’s in store for FY23?
Analysts at Morgan Stanley said they still see the potential for nearly 10% or more EPS raise on stronger conviction in energy markets. “The inflection in refinery margins (nearly doubled), significant normalisation in chemical portfolio profitability towards above mid-cycle levels, doubling of gas ASPs are all clearly multi-year shifts which are not yet factored in base case estimate,” they added.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
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