Nifty heavyweight Reliance Industries shares are in focus as it is scheduled to release its September quarter (Q2FY23) results today. According to analysts, the Mukesh Ambani-controlled conglomerate is likely to report strong year-on-year growth in consolidated net revenue and profit for the said quarter.
The company’s results usually lack an element of surprise, however, quite a lot of market observers keep a tab on the developments. This is reflected in the company’s share price. In the past five days, its shares have gained 5.87%, as compared to a 3.08% gain in the benchmark index Nifty 50.
Oil to chemicals business
The oil-to-telecom conglomerate’s oil-to-chemical (O2C) business makes more than 70% of its topline and it contributes about 50% to its operating profit. This business includes refining and petrochemical businesses. Analysts say that this business might have taken a hit due to
a sequential fall in Singapore’s gross refining margin (GRM) and the windfall tax on the export of fuels imposed by the government.
Oil producers made incremental profits in the June quarter due to elevated prices of petrol, diesel and jet fuel in the international market. However, the Government imposed windfall taxes on these products, therefore incremental benefits will be offset in this quarter. Further, its petrochemicals business is also expected to be subdued amid weak realisation.
“The refining margins have come off from a lifetime high combined with export duties,” said Citi Research in a report.
Telecom business
The September quarter is usually weak for the telecom business. However, analysts expect that Reliance Jio Infocomm’s earnings in Q2 might surge on the back of lower spectrum usage charges and tariff hikes.
Global brokerage Credit Suisse expects the company to report an increase of 6 million subscribers in the latest quarter. On the other hand, Kotak Institutional Securities expects an addition of 1 crore subscribers.
Retail business
Analysts expect this business to report good numbers due to higher footfalls and a sharp recovery in the grocery and fashion segment. The company earlier said that footfalls across its stores had exceeded pre-pandemic levels. ICICI Direct expects Reliance Retail to report strong operational performance in the September quarter, with revenues increasing 40% YoY to ₹ 63795 crores.
ICICI Securities has an ‘add’ call on the shares of Reliance Industries with a target price of ₹ 2700. The company’s shares were trading at ₹ 2486.00 at 12:59 PM on Friday and the given
target translates to an upside of 8.60%. According to the analyst, the company can achieve the given target in a period of one year.
Written by Simran Bafna
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