Reliance Industries Ltd (RIL) will report its third-quarter earnings on Thursday and analysts expect some pressure on refining margins on a sequential basis.

While the core refining business is expected to be weak, the big story could be the massive growth in Reliance Retail. Nomura expects revenue of Reliance Retail to double to 37,000 crore in the third quarter. The future for Reliance Retail looks even more bright, with brokerage CLSA expecting retail business revenue to rise over 12x to $137 billion by 2028 on the back of bundled product offerings with Jio connections and large physical store presence, which should give RIL a lead in electronics.

Reliance is also riding the premiumisation wave with its wide portfolio of premium- fashion brand joint ventures and could catapult its position in food and grocery market through its e-commerce platform.

The other vertical that could deliver once again this quarter is Reliance Jio following a sharp increase in subscriber base. Jio subscribers have risen 12 percent sequentially to 282 million, which will help drive its revenues by 11 percent on quarter to Rs 10,200 crore, however, ARPUs (average revenue per user) may continue to decline.

The core refining business though has been under pressure and mirroring the concerns, the gross refining margins or GRMs are expected to fall to 8.5$/bbl in the third quarter, down 1$ from the last quarter due to weak cracks for gasoline/ naptha and inventory losses.

However, the street will solely be focused on the growth in retail and telecom. The contribution is increasing from these two verticals, telecom and retail now form 26 percent of consolidated EBITDA and the growth from these two quarters will aid overall profitability of Reliance Industries .

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First Published:Jan 16, 2019 12:05 PM IST