The broker expects RIL to grow by 15% year-on-year (YoY) and operating profit for the quarter to rise by 9% to SEK 34,100.
“We expect strong digital (Jio) and retail performance (EBITDA +5% QoQ), boosting the consumer business share of segment EBITDA to 49%,” the report states.
Assuming a tax rate of 24%, UBS estimates that RIL’s consolidated net profit will increase by 10% to SEK 15,100, down 4% year-on-year.
RIL shares have been under pressure over the past five months as the imposition of a windfall profit tax on domestic crude oil and fuel exports clouded the outlook for its main oil-to-chemicals (O2C) business.
However, UBS maintained a ‘buy’ rating on the stock.
“We believe the share price is priced in the near-term weakness of Pekem and an overhang in export taxes, but not the potential for retail sales growth or the upside to new energy opportunities,” UBS said. In digital business, RIL subsidiary Reliance Jio Infocomm could see a further quarter increase in subscribers. Net subscriber additions for the quarter are estimated at over 7 million.
A further increase in average revenue per user (ARPU) to INR 180 per month leads to a 3% consecutive increase in operating profit, reaching Kroner 12,700.
The retail industry continues its strong growth in the previous quarter and is expected to post a 22% year-over-year revenue increase for 8% consecutive growth, supported by holiday season sales.
Crude refining margins improved quarter-on-quarter and fuel export taxes declined, while regional petrochemical spreads remained soft. As a result, the segment’s overall performance is expected to be subdued, he said.
(Disclaimer: Expert recommendations, suggestions, views and opinions are those of the experts themselves and do not represent the views of The Economic Times)
