Strength in Reliance Industries’ consumer verticals — digital services and retail — could cushion softness in the refining and petchem business and help drive growth in consolidated revenues for the December quarter, according to analysts tracking the stock. Profitability, however, could be flat year-on-year when RIL reports its numbers on January 19.

In addition to Jio and retail, analysts expect Reliance's exploration and production (E&P) business to deliver positive performance in the third quarter. However, the oil-to-chemicals (O2C) business is expected to witness a decline on account of product cracks and lower realizations.

On a quarter-on-quarter (QoQ) basis, Reliance Industries' EBITDA is expected to decline marginally due to moderation in diesel cracks, narrowing of Russian crude discount, and lower refining throughput due to maintenance shut-down and continued weakness in petchem margin.

The decline will be partly supported by robust growth in (E&P) earnings and steady growth in digital and retail business, said JM Financial Services.

RIL's O2C EBITDA is estimated to decline 11.7 percent QoQ Rs 14,400 crore due to moderation in gross refining margins (GRM) to $10/bbl (vs implied GRM of $12.5/bbl in 2QFY24), according to JM Financial.

Company's E&P EBITDA, however, is estimated to rise 13 percent sequentially to Rs 5,400 crore due to lower opex and marginal increase in KG D6 gas output; partly offset by a cut in ceiling price for high-pressure, high-temperature (HPHT gas), the brokerage said.

Telecom

The Mukesh Ambani-led conglomerate's digital arm Reliance Jio’s EBITDA is expected to grow due to improvement in ARPU and an increase in net subscribers

According to ICICI Securities, Reliance Jio’s Q3 FY24 revenue is estimated to rise 2.3 percent QoQ to Rs 25,300 crore, benefiting from subscriber additions, while ARPU growth is muted. Its net profit is seen at Rs 5,200 crore, up 2.7 percent QoQ. 5G-related costs (including operating cost, depreciation, and interests) are yet to be recognized in the income statement, pending the commercial launch, the brokerage said.

Jio's EBITDA may grow by 2.9 percent QoQ to Rs 14,500 crore due to an improvement in ARPU to Rs 183 from Rs 182 in Q2 FY24, and an increase in net subscribers by around 90 lakh QoQ, according to JM Financial. The ARPU growth was impacted in the quarter under review due to higher adoption of the 5G unlimited plan.

Reliance Retail

Reliance Retail’s EBITDA is also expected to grow, driven by a rising store count and an increase in footfalls. The retail arm’s EBITDA is expected to grow by 6.3 percent QoQ to Rs 6,200 crore, JM Financial analysts said.

Key monitorable

Further clarity on Reliance Industries' Rs 75,000-crore announcements in the new energy business, growth in retail store additions, and any pricing action in telecom are the key monitorable in the Q3 earnings. Margin outlook in refinery and petchem will also be keenly eyed.

In the previous quarter, RIL reported a consolidated net profit of Rs 19,878 crore, a YoY increase of 29.7 percent, despite a dip in revenue from its O2C business. The robust performance of its retail, Jio and upstream businesses drove profit growth.

Gross revenue from operations came in at Rs 2.55 lakh crore in the quarter ended September 2023, compared to Rs 2.52 lakh crore in the year-ago period. RIL’s EBITDA increased by 30.2 percent to Rs 44,867 crore in Q2 FY24.

Reliance share performance

Reliance Industries stock has been on a roll this year, rising over 7 percent in January so far. In comparison, benchmark Nifty 50 has risen 1.6 percent during this period. The stock hit a fresh all-time high of Rs 2,792.90 in the previous session.

Technical analysts believe that RIL stock may be headed into uncharted territory past Rs 3,000, or even Rs 3,100.

"Reliance has witnessed a multi-month breakout on the technical chart. The counter seems poised to continue its upward move with some in-between hiccups. The technical target for the counter based on chart setup is near Rs 3,000, but being an index heavyweight, we expect a gradual move over a period of time," said Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One Ltd.