Reliance Industries Q3 Results Review - OTC, E&P Segments Drive Sequential Recovery: ICICI Securities
RIL has reported a strong Q3 FY23 with 19% YoY jump in consolidated Ebitda and a smaller 1% YoY jump in net earnings.
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ICICI Securities Report
Reliance Industries Ltd. has reported a strong Q3 FY23 with 19% YoY jump in consolidated Ebitda and a smaller 1% YoY jump in net earnings (QoQ Ebitda up 13%, profit after tax up 15%).
Stronger performance of the oil to chemicals segment, coupled with sustained momentum from retail and upstream helped earnings.
Benchmark (Singapore) GRMs dipped by $2.4/barrel of oil to $5.9/bbl, but key product spreads for RIL like gasoline, diesel and aviation turbine fuel remained strong, offset by a $150/100 per tonne YoY/QoQ reduction in integrated petchem spreads.
RIL's OTC earnings also saw a ~$2/bbl hit (Rs 19 billion) in refining from the special excise duty or ‘windfall tax’. Upstream was strong with gas output at ~19 metric million standard cubic metre per day in Q3 and 91% YoY jump in Ebitda helped by stronger realisations.
Prospects for Q4 can further improve for the OTC business, helped by higher Russian crude and steady product spreads while retail and RJio will likely continue to show growth.
However, we remain sceptical of any meaningful expansion in return ratios and/or any major move to return cash to shareholders in view of the sustained capex momentum over FY22-FY24E.
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