Will the RIL Q1 figures be a surprise?

The government’s latest diktat to cut windfall taxes on petrol, diesel and kerosene is set to benefit India’s biggest conglomerate – Reliance Industries – on two levels.

First of all; RIL is one of two private players, representing a significant share of the country’s overall fuel exports.

Second, the company headed by Mukesh Ambani runs India’s only export-oriented refining unit at Jamnagar, Gujarat.

Thus, the decision to remove levies on exports from refineries located in the special economic zone will give RIL a head start.

Nirav Karkera, Head of Research, Fisdom, says the oil refining sector is extremely sensitive to taxes. The windfall tax could have affected RIL’s bottom line by 30-40%. This tax cut is likely to support healthy margins. The move also provides support for refining the company’s cash flow, Karkera said.

While fundamentally the developments will support the stock, it sees resistance at the 200-day moving average according to the technical charts.

Shares of Reliance Industries are hovering around 200-DMA of 2,507 rupees. Only a decisive move above this level would push the stock towards a level of 2,700 rupees.

Meanwhile, the company will release its June quarter report card later today. Analysts say RIL is likely to release a solid set of numbers for the first quarter of FY23, driven by strong oil earnings.

According to Mayuresh Joshi, head of equity research at William O’Neil India, the refining sector is expected to post “supernormal” earnings. Singapore’s refining gross margin averaged $23 to $24 in the first quarter. However, the recent fall of Singapore’s GRM raises the question of sustainability.

Joshi told Reliance Retail, Jio are seeing a sustained recovery. Growth in volume and value will continue, and Jio should remain the strongest standalone business. The improvement in ARPU will be positive, he says.

Overall, Bloomberg’s consensus estimate pegs consolidated net profit at Rs 21,615 crore on net sales of Rs 2.25 trillion. Ebitda is estimated at around Rs 38,500 crore.

Meanwhile, Bandhan Bank, Coforge, HDFC AMC and JSW Steel are other major companies due to report their first quarter results today.

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