According to reports from The Hindu BusinessLine, Reliance Industries could generate nearly ₹5,700 crore in additional EBITDA from its O2C business in the September quarter as Europe's diesel shortage lifts refining margins. Nuvama Institutional Equities estimates O2C EBITDA at ₹20,700 crore, up 38% year-on-year from ₹15,008 crore and 22% sequentially from ₹17,010 crore in the June quarter. The projected ₹5,700-crore increase would account for around 73% of Reliance's estimated ₹7,800-crore rise in consolidated core EBITDA to ₹53,700 crore. Nuvama has maintained its 'Buy' rating on Reliance Industries with a 12-month target price of ₹1,766, citing further expansion in middle distillate crack spreads as a key driver.
As reported by The Hindu BusinessLine, the opportunity became evident in July when Reliance loaded an estimated 4-5 million barrels of diesel from Jamnagar for European destinations, marking its highest monthly shipment level in ten months. European diesel margins and international gasoil prices surged in late July amid supply disruptions, Saudi refinery outages, Russian export restrictions and tightening inventories across Europe. Reliance responded by increasing the share of middle distillates such as diesel and jet fuel in its output mix, leveraging Jamnagar's operational flexibility to capture higher international realisations.
According to reports from The Hindu BusinessLine, Reliance's 35.2 million tonne-per-year special economic zone (SEZ) refinery is exempt from export duties, unlike its 33 million tonne domestic tariff area (DTA) refinery and other taxable exporters. Diesel export duties ranged between ₹8.50 and ₹25.50 a litre during the July-September quarter. At the peak rate, the levy translates to roughly ₹4,055 per barrel, creating a significant difference in net export realisations. While the exemption enhances export profitability, the expected year-on-year earnings improvement is being driven primarily by stronger refining margins and higher throughput rather than the tax benefit alone.
As reported by The Hindu BusinessLine, Nuvama expects Reliance's crude throughput to rise about 10% sequentially to nearly 20 million tonnes following maintenance shutdowns in the June quarter. The brokerage expects Jio's EBITDA to rise 16% to ₹21,900 crore, while retail and oil-and-gas EBITDA could decline 1% and 6% respectively. Consolidated net profit is projected to grow 15% to ₹20,900 crore. Although the diesel export levy was reduced to ₹16 a litre from October 1, brokerages expect global refining margins to remain above $10 a barrel over the medium term, potentially sustaining earnings momentum for Reliance's refining business even as petrochemical markets remain under pressure.
