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RIL: buy, sell or hold post Q1 results?

The company reported a consolidated profit of Rs 13,248 crore for the first quarter of FY21.

 

Reliance Industries (RIL) share price slipped in the opening trade on July 31 after the company came out with its June quarter earnings.

The company reported a consolidated profit of Rs 13,248 crore for the first quarter of FY21, with Jio's ARPU growth of 7.4 percent QoQ at Rs 140.3 per subscriber per month beating Street expectations.

Consolidated profit during the June quarter 2020 (which included exceptional gain of Rs 4,966 crore from stake sale to BP in Reliance BP Mobility) increased 102.4 percent sequentially and the year-on-year increase was 30.6 percent.

Consolidated profit in the March quarter 2020 stood at Rs 6,348 crore and Rs 10,141 crore in the corresponding period of last year.


Here is what brokerages have to say about the stock and the company:

Prabhudas Lilladher | Rating: Buy | Target: Raised to Rs 2,170 from Rs 1,828

The brokerage house raised the price target on the stock factoring in higher valuation in Jio and retail business on rollover to FY23E versus earlier September 22 to factor in a higher multiple. It valued the hydrocarbon business in the September 22 valuation at EV/E of 8.5x vs 8x earlier.

Despite a sharp run-up in stock prices (+140% in the past four months), Prabhudas Lilladher believes positive news flow on global partnerships or stake sale is likely to keep valuations elevated.

Sharekhan | Rating: Buy | Target: Rs 2,400

Recent fund-raising strengthens RIL’s balance sheet; potential monetisation of the stake in retail business and Jio’s likely listing could create long-term value for investors. It expects PAT to clock CAGR of 20 percent during FY20-FY22E driven by digital and retail businesses.

It revised FY2021E-FY2022E EPS to factor in lower refining margin offset by higher other income (given a sharp rise in cash levels) and introduced FY2023E EPS and factored in an increased equity base of Rs 676 crore (for rights issues) over FY2022E-FY2023E.

The potential listing of Jio and stake sale in retail business could further unlock value from consumer-centric business and create long-term wealth for investors

Goldman Sachs | Rating: Buy

The Q1 was in-line, strong relative outperformance versus peers in a subdued quarter. The weaker energy was offset by stronger-than-expected retail performance.

Both retail and energy saw EBITDA decline due to local/global lockdowns, while telecom EBITDA grew 50 percent YoY on tariff hikes and higher data consumption.

The research house sees more upside in the stock in the near future and expects EBITDA to double by FY25 driven by hyper-growth from consumer businesses, CNBC-TV18 reported.

"Reliance Retail's topline performance was resilient considering the adverse operating environment. Reliance Jio’s performance was broadly in line but the ARPU at Rs 140 surprised positively," said Deepak Jasani, Head Retail Research, HDFC Securities.

"Reliance’s reported bottomline growth was helped by low tax rates due to new rates and deferred tax credit due to planned O2C restructuring and exceptional income of Rs 4,966 crore (net of taxes of Rs 1,508 crore) due to profit on the divestment of stake in domestic fuel retailing business."


Source - Moneycontrol.com

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