It has been a tough year for Mukesh Ambani-controlled Reliance Industries (RIL) as it saw a decline in production from the D6 basin in the Krishna – Godavari region, besides seeking an upward revision in the price of gas produced from this field from $4.20 per million British thermal unit (mBtu) to $14.20 an mBtu.
In this backdrop, let us look at what top brokerages expect from the Q4FY12 and the full-year results due today.
Most brokerages are of the opinion that the market heavyweight will be report a decline in net profit for the financial year 2012. Lower gross refining margin (GRM), dip in gas output and higher subsidy burden is likely to impact the financial performance of RIL, says IDBI Capital in a recent report. They expect GRM of $6.7/bbl in Q4FY12 from $9.2/bbl in Q4FY11, KG-D6 gas volume to drop to 37mmscmd from 51mmscmd and petchem margin to shrink to 10% from 14.4% in Q4FY11.
It expects the revenue to be at around Rs 84,308.6 crore in Q4FY12, which would mean a 16% jump from Q4FY11's Rs 72,674 crore, though down 1% q-o-q. Adjusted profit after tax (PAT) is likely to be at Rs 4,269.3 crore in the quarter under review – down around 20% on y-o-y basis. They have recommended an 'ACCUMULATE' rating with a price target of Rs 847.
Meanwhile, analysts at Motilal Oswal expect KG-D6 production decline till FY14 before additional development. They maintain a neutral rating on the stock and expect the FY12 EPS to be at Rs 67.1 – down from Rs 68.4 as reported in FY11. Sales and EBITDA for FY12 is expected to fall by 6.2% and 3.7%, respectively. PAT, however, is expected to rise 3.3% on a Y-o-Y basis, they say.
“There will be contraction in PAT and a decline in margins (on a sequential basis) despite reasonable revenue growth," states a report from Emkay Global. They expect Gross Refining Margin (GRM) at $6.6 per bbl for Q4FY12E. They peg the Q4FY12 EPS at Rs 12.3.
Morgan Stanley expects a 17% y-o-y drop in net profit to Rs 4,447.4 crore in the recently concluded quarter. Sales are seen declining 12% to Rs 81,345.9 crore. Reliance, according to them, is one of the two biggest negative contributors to Sensex earnings growth.