Why Q1 could be an unprecedented quarter for Reliance

What saves Reliance is that Jio will probably stand out among the segments in terms of year-on-year as well as quarter on quarter performance, says Probal Sen, Senior V-P Research, Centrum Broking.

We have already seen so much of a build up but which are some of the factors or numbers that you will keenly be eyeing this time?
I am a bit conservative on GRMs and we are closer to six in terms or our estimates. But EBITDA could decline to around Rs 18,500-19,000 crore and about Rs 8,000 crore of consolidated PAT is also fairly weak compared to earlier performance. I do not remember Reliance having reported less than $7 GRM for the last five years if memory serves. So, obviously this is going to be an unprecedented quarter.

What saves Reliance is that Jio will probably stand out among the segments in terms of year-on-year as well as quarter on quarter performance being close to Rs 7,000 crore of EBITDA and maybe a Rs 6-7 improvement in ARPU and about eight million odd improvement in subscription. It is still a very credible performance.

Yes, this is going to be a weak quarter but what people are looking for is essentially the roadmap. Mr Ambani clearly mentioned the beginning of unlocking value in this segment and any updates on that front, in terms of a strategic stake sale or any kind of interest evinced by global majors, would be very useful.

Typically Reliance does not give too much away until the deal has concluded, but any flavour on that in the interaction post the results would be very useful. The second interesting thing is that the ARPU improvement has barely started for Jio. That has to be kept in mind versus some of the other telecom players. A big extent of ARPU improvement can come through because of the way their subscriptions have run for a fairly long period of time. They will start to see the real ARPU only in the second half of the year.

So to that extent, much more upside is in store from a realisation perspective for the telecom business. But yes, the focus very clearly is what is happening in retail and the view that people will have to take a 3-5-year view for this business because that is when JioMart really starts to make a difference.

Hopefully, you will start to grab a share of the huge unorganised retail segment that has been untouched. There is an organised and ecommerce segment that everybody is fighting for, but what JioMart is trying to do is really make a dent in the unorganised retail business and any updates on that as we go along will be very useful. We would really treat this quarter as a one off. There is weakness and we will have to see and understand the outlook particularly on the OTC business but this is a 3-5-year story right now. One weak quarter should not change too many things for us.