Will oil companies’ Q2 numbers fuel investor confidence?
Shares of Reliance Industries Ltd (RIL) have increased as much as 18% since its annual general meeting on 12 August where chairman and managing director, Mukesh Ambani, said the company will be a zero net debt one within the next 18 months by 31 March 2021. In that backdrop, when RIL announces its September quarter results on Friday, “any signs of decline in capex intensity should increase confidence in our view,” said analysts from HSBC Securities and Capital Markets (India) Pvt. Ltd.
That apart, the sequential recovery in refining margin, should help RIL’s refining business earnings. For perspective, benchmark Singapore GRMs have averaged to $6.5 a barrel for the September quarter from $3.5 a barrel during the June quarter. “A sharp recovery in refining margins coupled with lower ethane and LNG prices, and higher petchem volumes should partly offset weakness in benchmark chemical margins and deliver a 7% qoq growth in standalone earnings,” said HSBC analysts in a report on 8 October.
