Reliance's O2C earnings to rise 38% amid diesel shortage
after close1 source ↓machine-written, see hownot a recommendation
- in its O2C
- 38% increase
- projecting EBITDA
- ₹20,700 crore
- in the same
- ₹15,008 crore
- in additional EBITDA
- ₹5,700 crore
Reliance Industries is poised to report a 38% increase in its O2C (Oil to Chemicals) earnings for Q2 FY2024, projecting EBITDA of ₹20,700 crore, up from ₹15,008 crore in the same quarter last year. This surge is primarily driven by Europe’s ongoing diesel shortage, which is significantly boosting refining margins. The Jamnagar facility's strategic advantages, including its export-duty exemption and heightened crude-processing capabilities, are expected to contribute nearly ₹5,700 crore in additional EBITDA during the September quarter, accounting for approximately three-fourths of the conglomerate's incremental operating earnings.
The implications of this earnings boost are substantial for Reliance and the broader energy sector. The tight global supply of diesel and aviation fuel positions Reliance favorably to capitalize on elevated market prices. According to Kranti Bathini from WealthMills, the scale and flexibility of the Jamnagar refinery enable Reliance to optimize crude sourcing and direct products to the most lucrative markets. This shift marks a notable change in Reliance's earnings mix, with refining playing a more significant role in growth compared to its digital business during this quarter.
Looking ahead, investors should monitor the upcoming quarterly results announcement, expected in mid-November 2023, and any further developments regarding global fuel supply dynamics. The performance of the O2C segment will be crucial in determining Reliance's overall financial health and market positioning.
Source: BusinessLine, 11 Oct 2023
Not investment advice. For informational purposes only.