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Analyst Opinion on Fourth Quarter Earnings

National brokerage firm ICICI Securities says RIL delivered strong performance across all segments in the March 2022 quarter. lower margin environment in the petchem segment (OTC segment EBITDA increased 25% YoY annual). Upstream showed moderate QoQ trends, with the removal of the shale segment resulting in a 23% decline in QoQ EBITDA even as domestic activity remained strong,” the brokerage said in a report.

According to the report, RIL’s retail business was a disappointing QoQ, with higher base and seasonal trends driving a 3% QoQ decline in EBITDA. However, the agency remained confident about the outlook for earnings growth, but remained skeptical of any significant expansion in yield ratios and/or any major moves to return money to shareholders given plans. of “New Energy” investment.

The agency has increased its FY23E/FY24E GRM estimate for RIL by approximately $1 per barrel for each year, given the continued strength in product spreads seen on April 22 and forecasts thereon. “This is offset by minor downward revisions to retail segment estimates, resulting in an EBITDA improvement of almost 1.8%. EPS, however, forecasts a 2.2-2.9% downward revision due to significantly higher capital expenditure than expected, hence higher amortization/interest costs,” it says. -he.

The brokerage reiterated an “ADD” rating, with a target price of ₹2,865 per share from ₹2,960 previously estimated.

YES Securities analysts also recommended “ADD”, with a revised target price of ₹2,840 each, based on sum-of-parts valuation (SOTP), from the current market price of ₹2,620 , a potential upside of 8.5% .

According to YES Securities, RIL’s operating profits were broadly in line with street estimates. The strong year-on-year growth was mainly driven by exceptionally strong refining margins, resulting from the sudden expansion in the spread of HSD (high-speed diesel) cracking following the Russian-Ukrainian conflict. However, the same was partially offset by weaker petrochemical cracks.

Going forward, the agency expects the refining environment to remain strong due to apprehension of a disruption in the supply of refined products from Russia and China, while the environment Petrochemical looks weak primarily due to tepid Chinese demand and firmer naphtha. Additionally, he believes that Telecom ARPU could improve further in FY23, but retail business could be impacted by the current inflationary environment.

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