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Brokerages largely bullish on Reliance Industries post Q4 results 


Reliance Industries was trading over 3 per cent lower intraday in a weak market on Monday after the company reported earnings for the quarter ended March 31, 2022, over the weekend.

However, brokerages remained largely bullish on the stock.

At 12:22 pm, the index heavyweight Reliance Industries was trading at ₹2540.25 on BSE, down ₹80.90 or 3.09 per cent. It had opened at ₹2575.00 as against the previous close of ₹2621.15. It recorded an intraday high of ₹2597.20 and a low of ₹2520.50.

On NSE, it was trading at ₹2,540.80, down ₹79.85 or 3.05 per cent.

RIL reported its quarterly earnings on May 6. It posted a 22 per cent growth in consolidated net profit at ₹16,203 crore for the quarter ended March 31, compared to ₹13,227 crore in the corresponding quarter last year. The growth was led by higher oil refining margins and an increase in average revenue per user in the telecom business. The oil-to-telecom conglomerate’s income from operations rose 37 per cent to ₹2.11-lakh crore compared to ₹1.54-lakh crore in Q4 FY22.

For the full year 2021-22, Reliance reported gross revenue of ₹7.92-lakh crore, becoming the only Indian company to cross the $100-million revenue mark. Revenue from operations stood at ₹7.21-lakh crore. Net profit for the full year was at ₹60,705 crore compared to ₹49,128 crore in the previous year.

Meanwhile, Reliance Jio Platforms reported a 22.9 per cent growth in net profit for the fourth quarter ended March 31, 2022 driven by uptake in data usage and tariff increase. Gross revenue for the quarter was ₹ 26,139 crore higher by 20.7 per cent compared to the same quarter last year.

The company’s average revenue per user increased to ₹167.6 per subscriber per month compared to ₹138 in the fourth quarter of 2020-21. Total data traffic was 24.6 billion GB during the quarter, which is 47.5 per cent growth y-o-y.

Gross Revenue for the full year was ₹95,804 crore higher by 17.1 per cent y-o-y. Net Profit for the year was ₹15,487 crore , higher by 23.6 per cent.

Brokerages target

Global brokerages were largely bullish on the stock, citing new energy business and telecom as growth drivers.

Goldman Sachs gave the stock a Buy Rating at a target price of ₹3,200, stating that refining led to earnings acceleration to drive consensus upgrades. It expects further acceleration in earnings with an expectation of 21 per cent QoQ growth in Q1 FY23 led by refining & E&P

According to Goldman Sachs, the three main share price drivers include a 50 per cent/21 per cent EBITDA growth in FY23/24, full integration of Jio Mart with WhatsApp and more details on RIL’s new energy business roadmap.

Morgan Stanley gave an Overweight rating with a target price of ₹3253. As per the report, key triggers include higher refining margins, lower telecom subscriber churn, and tighter global gas markets that point to an over $20 billion EBITDA run-rate by end-2022.

With progress in new energy investments, a $50 billion market cap uplift appears ahead as

EBITDA trends pose upside risks, it said.

CLSA gave the stock a Buy rating with a target price of ₹2,955, citing a strong O2C outlook but weak retail. It raised FY24 EPS forecast by 5-9 per cent on higher refining margins.

Jefferies also gave a Buy rating to the stock at a ₹2,950 target price.

According to Jeffries, refining looks strong in CY22 on geopolitical development while petrochem should be soft on weak Chinese demand.

“With earnings boosted by energy inflation, RIL could act as a safe haven in today’s context,” it said while raising FY23E O2C EBITDA by 18 per cent.

Some give a Neutral rating

Credit Suisse gave the stock a Neutral rating with a ₹2510 target price.

JP Morgan also gave the stock a Neutral rating at a target price of ₹2575, adding that capex remains sharply elevated.

Domestic brokers remain bullish

However, most domestic brokerages remained bullish on the stock.

ICICI Securities maintained an Add rating, revising its target price to ₹2,865 from ₹2,960

HDFC Securities also gave an Add rating to Reliance Industries (RIL) with a price target of ₹2,825 premised on recovery in the O2C businesses, continued EBITDA growth in the digital business, driven by improvement in ARPU, subscriber addition, and new revenue streams; and potential for further value unlocking in the digital and retail businesses.

Yes Securities also gave it an Add rating at a ₹2,840 target price.

Motilal Oswal Research reiterated its Buy rating on the stock with a target price of ₹2,935, adding that consumer business stood at the forefront of growth.

Prabhudas Liladhar also gave the stock a Buy rating with a ₹3,000 target price.

Emkay gave the stock a Hold rating with a target price of ₹2,850.

Brokerage Rating Target price (in ₹)
Goldman Sachs Buy 3,200
Morgan Stanley Overweight 3,253
CLSA Buy 2,955
Jeffries Buy 2,950
Credit Suisse Neutral 2,510
JP Morgan Neutral 2,575
ICICI Securities Add 2,865
HDFC Securities Add 2,825
Yes Securities Add 2,840
Motilal Oswal Research Buy 2,935
Prabhudas Liladhar Buy 3,000
Emkay Hold 2,850

Published on May 09, 2022

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