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    RIL stock could rally up to 20% post strong Q1 results: Brokerages

    Synopsis

    Following the June quarter results, brokerages turned neutral to bullish on RIL stock.

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    Global brokerage remained upbeat on Reliance Industries (RIL) after the oil-to-telecom behemoth posted a 6.8 per cent year-on-year (YoY) rise in its consolidated net profit for the quarter ended June 30.

    The firm led by Mukesh Ambani had posted a net profit of Rs 10,104 crore in the April-June quarter against Rs 9,459 crore in the same period last year.

    Following the June quarter results, brokerages turned neutral to bullish on RIL stock.

    Brokerage firm UBS maintained ‘Buy’ on RIL with a target price of Rs 1,500, indicating an upside of over 20 per cent from the current market prices.

    The foreign brokerage firm added that Reliance performed in a tough environment yet again.

    On the other hand, Credit Suisse maintained ‘Neutral’ with a target price of Rs 1,350. It added that Jio surprised on many counts and overall capex remained high due to higher spend on the refinery.

    Standalone net profit of Rs 9,036 crore, up 2.4 per cent over the previous year, was a record.

    It clocked a record consolidated revenue of Rs 1,72,956 crore in Q1 on the back of robust retail sales.

    RIL opened more retail stores and added 24.6 million subscribers to its Jio mobile phone service that helped increase the profitability of the venture as its traditional oil refining and petrochemical business witnessed margin pressures.

    Reliance reported record pre-tax profit from its retail and telecom businesses. The two now account for nearly 32 per cent of EBITDA, up from close to 25 per cent previously.

    Adding 229 new stores to take the total strength to 10,644, the retail business posted a 70 per cent jump in pre-tax profit to Rs 2,049 crore and a 47.5 per cent rise in revenue to Rs 38,196 crore.

    Motilal Oswal Financial Services also retained ‘Neutral’ rating on RIL with a 12-month target price of Rs 1,400.

    “Capex intensity remains high with a total investment of Rs 22,600 in 1QFY20, of which Jio accounted for Rs 8,500 crore, RIL standalone for Rs 6000 crore and retail for Rs 2000 crore. There is no specific guidance on capex going forward. The petcoke gasifiers appear to have been fully commissioned, which should reduce capex, at least in the standalone business,” Motilal Oswal Financial Services said in a report.

    It also added that the current valuations of the new-age retail and telecom segments reflect the fair value of those businesses, which is already built in our rich valuations.

    The shares of the company closed 2.52 per cent higher at Rs 1280.50 on BSE.
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    1 Comment on this Story

    Niveza Equity Research380 days ago
    Reliance stock has surged today backed by strong Q1FY20 figures. The company has reported 6.82 per cent yearly rise in profit at Rs 10,104 crore for the June quarter. There is also lucrative growth in income units at Rs. 1, 56,976 crore Vs Rs. 1, 28,756 crore YoY. Though there are some pressure at refining and petrochemical segment pertaining to the US and China trade war and other Geo-Political issues, the telecom and retail segment is expected to perform well in long term also. Search Google for NIVEZA FREE Share Market Tips today.
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