Expect Reliance Ind to report GRMs in $11.30-11.50/bbl range: Deven Choksey

In a chat with ET Now, Deven Choksey, MD, KR Choksey Investment Managers, shares his expectations from Reliance Industries results scheduled later for the day.

ET Now: What is your own expectation of what Reliance may report on Tuesday?

Deven Choksey: The performance would come largely from the gross refining margin (GRM) side. Given the kind of Asian cracks and prices that Reliance Industries has enjoyed in the last quarter, except the gasoline, realisation on all other areas such as naphtha, fuel oil and jet fuel diesel was quite significant. That leads me to believe that GRMs could be well in excess of $11 per barrel. We basically expect GRMs somewhere in $11.30-$11.50 range. Should that happen, then it should be the record period for Reliance from the refining business as far as the profit performance is concerned. Along with that what we are also likely to see is about 18 per cent volume growth on a year-on-year basis in the petrochemical segment. In that segment, the higher amount of capacities would probably start giving better volume contribution into the business of the company.

Couple with lower feedstock price, the company is likely to record better profit margins in this particular quarter in petrochemical and polymer segments. So this is one area which is likely to give good amount of performance. Reliance Jio commentary would make more sense because if one has to believe that in next two years'time Reliance Jio could produce the profit equal to what the Reliance industry is producing today, then probably the kind of a rerating has to happen in this particular stock . Eyes are going to be more on to the completion of the projects and contribution coming there.