Nomura India Predicts RIL Q3 O2C Ebitda of Rs 14,000 Crore, Reflecting QoQ Decline Amid Refining Margin Challenges
Nomura India anticipates a 4% YoY increase in Reliance Industries Ltd (RIL) net profit for Q3. In their note on the oil & gas sector, the brokerage sets a current share price target of Rs 2,985 for RIL.
Nomura India forecasts Reliance Industries Ltd (RIL) to announce a 3% YoY increase in consolidated revenue, reaching Rs 2,24,480 crore. The expected Ebitda (earnings before interest, taxes, depreciation, and amortization) is projected to rise by 14% YoY, reaching Rs 40,170 crore.
Within RIL’s business segments, the Oil-to-Chemicals (O2C) sector is predicted to show flat Ebitda growth, the upstream segment is expected to witness a 35% increase, while the refining segment is anticipated to experience a 17% degrowth. Despite these variations, refining throughput is expected to remain flat.
Nomura India Forecasts Reliance Industries: 3% YoY Growth in Consolidated Revenue, 14% YoY Rise in Ebitda to Rs 40,170 Crore; O2C Business Expected to Show Flat Ebitda Growth.
Nomura India, in their statement on January 18, projects a 2% sequential decline in Reliance Industries Ltd (RIL)’s consolidated Ebitda for the third quarter of the fiscal year 2023-24 (3QFY24F). They estimate the Ebitda to be Rs 401.7 billion. This moderation is attributed to the sustained robust growth in the consumer-facing businesses of Jio and retail.
However, this positive performance is anticipated to be offset by the decline in the Oil-to-Chemicals (O2C) segment, driven by a decrease in middle distillate spreads and lower margins in the petrochemical business.
Nomura India anticipates a 14% quarter-on-quarter (QoQ) decline in Reliance Industries Ltd’s (RIL) Oil-to-Chemicals (O2C) segment Ebitda to Rs 14,000 crore. This is attributed to a decrease in refining margins from $12 per barrel in Q2FY24 to $10 per barrel and the existing weakness in the petrochemical business.
Nomura India reports a decline in key polymer spreads, with PE and PP down 5% and 6% QoQ, respectively, and PVC dropping by 41% QoQ. They expect upstream Ebitda for Reliance Industries Ltd (RIL) to increase by 10% QoQ to Rs 5,200 crore, driven by higher volumes exceeding 30 million metric standard cubic meters per day (mmscmd), although realizations may decrease due to declining ceiling HPHT (High-Pressure, High-Temperature) prices.
On the consumer-facing side, Nomura estimates that Jio’s Ebitda will rise by 5% QoQ to Rs 13,500 crore, supported by strong subscriber additions and a modest increase in Average Revenue Per User (ARPU) to Rs 183.5 per month. They also predict a 10% QoQ increase in Reliance Retail’s Ebitda to Rs 6,150 crore, benefiting from festive quarter growth, store additions, and increasing footfalls.
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