Reliance Industries Q4 results today: 5 things to watch out for

Reliance Industries (RIL) is likely to report soft earnings for March quarter, as Covid-19 pandemic cast its shadow on the refinery and retail businesses. However, the robust performance by its telecom arm may support bottom line on a consolidated basis.

RIL shares traded 3 per cent higher at Rs 1,469 at around 10.25 am, while the benchmark BSE Sensex was up 3 per cent at 33,713 around the same time. The oil-to-telecom major in a surprise move recently signalled that the board would consider rights issues in addition to the normal issues of dividend. This is the first such issue for RIL in 29 years and analysts said the move will provide additional liquidity and confidence to new investors. The company is scheduled to announce its earning later in the day.

Here are the five things to watch out for in RIL’s fourth quarter earnings:


Net profit
Kotak Institutional Equities sees 3.40 per cent year-on-year and 14 per cent quarter-on-quarter fall in net profit.

Revenue and Ebitda
The brokerage projects 11.80 per cent YoY and 1.3 per cent QoQ growth in net sales for RIL at Rs 1.38 lakh crore in March quarter. However, it projects 1.2 per cent YoY and 8.1 per cent QoQ drop in Ebitda. “We expect standalone Ebitda to decline sharply QoQ reflecting lower refining margins at $7.2 per bbl ($2/bbl QoQ) amid weaker product spreads and lower overall margins for petchem segment,” Kotak said.

Jio Q4 results
Reliance Jio’s bottomline in Q4 is expected to grow by over 60 per cent year-on-year, supported by tariff hikes in December and incremental subscriber addition. Jio’s strong performance will also support parent RIL from what analysts believe could have been ‘the weakest quarter in years’ as its oil and gas segment is facing collapse in demand due to coronavirus lockdown.

“We expect Jio to report 41.5 per cent YoY growth in revenues led by 29 per cent increase in average subscribers and 10 per cent uptick in ARPU to Rs 139 YoY (8 per cent QoQ) led by the price increase in December. Jio's net profit to increase by 66 per cent YoY,” said Dolat Capital. “While RIL’s cyclical business earnings could post a steep decline in Q4, earnings expansion in the telecom (RJio) and retail businesses could save the day,” brokerage firm BOBCAPS said in a report.

Debt reduction plan and management commentary
The key focus will be on the details of the rights issue, fineprint of the Facebook-Jio deal and any progress of the deal with Saudi Aramco. Details on the debt reduction plan will also be keenly awaited by market participants.

Updates on retail business
RIL has been significantly outperforming estimates on retail business revenue growth. The ongoing economic slowdown amid the nationwide lockdown could affect the outlook on retail revenues and hurt valuations.