Covid-19 likely to hit Reliance Industries’ Q1 profit, say brokerages

Oil-to-telecom conglomerate Reliance Industries Ltd is likely to report a drop in its first quarter net profit as Covid-19 lockdown disrupted economic activity that resulted in its oil refineries, petrochemical plants and retail business operating at lower capacity or fewer days, brokerages said.

An analysis of 12 brokerage research reports shows that expectations for RIL’s net profit for the quarter ended June 2020 ranges from Rs 4,600 crore to Rs 8,083 crore.

The average estimate of 12 brokerage houses stands at Rs 6,994 crore for the June 2020 quarter. This is 30.8 per cent lower than the June 2019 quarter net profit of Rs 10,104 crore.

The average estimate of 12 brokerage houses for refining margins is $6 per barrel. This compares to $8.9 per barrel gross refining margin (GRM) a year back.

Reliance is to report its April-June quarter earnings on Friday.

The AprilJune 2020 quarter has been extremely tough for the petroleum and petrochemicals sector, as India as well as many other large countries undertook months-long lock-downs that stalled local economic activity and posed challenges to production, transportation and distribution processes.

Edelweiss expected RIL’s EBITDA to drop 22 per cent owing to weakness in refining, petchem and retail, likely outset by Jio.

JM Financials said the Singapore Dubai GRM was at a record low of negative $1.0 per barrel in the first quarter of FY2021, given the unprecedented ~20% contraction in global oil demand due to the global lockdown.

According to HDFC Securities, RIL’s EBITDA is likely to decrease by 24 per cent QoQ owing to 33 per cent fall in GRM to $6 and decline in petchem margins.