Reliance Jio Might Post Double Profit In Q4 2020: Report

Reliance Jio is likely to post double profit in the fourth quarter of the last financial year, thanks to the tariff hike and the increased subscriber base. Besides, analysts believe that it also will get support from Reliance Industries.

"While RIL's cyclical business earnings could post a steep decline in Q4, earnings expansion in the telecom (RJio) and retail businesses could save the day," brokerage firm BOBCAPS said. Adding to that, "RJio earnings could improve further in Q1FY21 as data usage surges post the enforced economic lockdown."

Similarly, another brokerage firm believes Reliance Jio might report 139 percent profit year-on-year and 32 percent quarter-on-quarter. "Performance of JIO is set to remain strong, with PAT (profit after tax) doubling from a year ago," IIFL Securities said.

In addition, the firm believes that Jio will add 20 million subscribers in Q4 2020. It is also expected that Jio might get new users from mobile number portability (MNP). On the other hand, Bank of America states that average revenue per user (ARPU) is expected to be increased by only one percent, which is less than Airtel as the latter is likely to post more APRU in Q4 2020.

Besides, Kotak estimates that Jio's earnings before interest tax depreciation and amortization (EBITDA) is also expected to increase by 47 percent during the same quarter. "Similar to other telcos, we expect data usage per subscriber per month jump to 13GB (from 11.5GB in Q3)," BofA said in a report.

Notably, last year, all private players Reliance Jio, Airtel, and Vodafone-Idea had raised tariffs to 42 percent. However, Jio's tariffs are still 10 percent cheaper than Airtel and Vodafone-Idea. So, this will help Jio to attract more subscribers' via MNP, especially Vodafone-Idea subscribers, as the latter is struggling to offer a good network.

Meanwhile, Reliance Jio has introduced a new data pack, where it is providing 2GB data. The Jio Data pack is available only for four days. The company is silently adding this benefit to all customers' accounts. In fact, this is specially designed for the lockdown period. To check the availability of 2GB data, users need to check the My Plans section on the My Jio application.