Nomura India’s Outlook and Target Price for RIL Q3 Results

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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