A few brokerages trimmed their price targets for Reliance Industries (RIL) while a few others maintained their price targets on the stock following the oil-to-telecom major’s September quarter results.
Analysts appreciated better-than-expected retail revenue and Ebitda growth of 11.8 per cent and 10 per cent sequentially. Jio’s Ebitda margin at 49.5 per cent beat Street estimates, they said. That said, a sharp 21 per cent miss in the standalone Ebitda due to SAED impact and lower refining margin were key negatives, analysts added.
Prabhudas Lilladher slashed its price target on RIL to Rs 2,892 from Rs 3,140 earlier. Emkay Global reduced its price target on the stock to Rs 2,710 from Rs 2,800. JM Financial kept its target unchanged at Rs 2,950. ICICIdirect has a target of Rs 2,700 on the stock; Motilal Oswal finds the stock worth Rs 2,855 while Nuvama Institutional Equities sees it at Rs 3,205. Sharekhan has kept its target unchanged at Rs 3,050 on the stock.
In all, analyst largely retained their ‘buy’ or ‘Hold’ recommendations on the stock, with their price targets suggesting an up to 31 per cent potential upside.
On Tuesday, the scrip fell 1.54 per cent to close Rs 2,441.55 on BSE. The scrip has fallen 12 per cent in the last six months against a 4per cent rise for the BSE Sensex. The above targets suggest up to 31 per cent potential upside for the RIL stock.
Long term prospects and dominant standing of RIL in each of its product & service portfolio provides comfort for long term value creation, said ICICIdirect, adding that RIL’s consumer business will be the growth driver, going ahead.
“However, refining product cracks have seen correction compared to peaks witnessed in June quarter,” the brokerage said.
JM Financial said RIL’s consolidated Ebitda for the quarter was 3 per cent below its estimates account of lower oil to chemicals (O2C) segment Ebitda.
“Digital and Retail segment Ebitda were stronger than expected. O2C Ebitda was 5 per cent below estimates due to implied lower GRM at around $9.5 per barrel. We reiterate ‘Buy’, given RIL’s industry leading capabilities across businesses and expectation of robust 14-15 per cent EPS CAGR over the next 3-5 years,” JM Financial said.
Nuvama Institutional Equities said RIL’s refining should remain weak in the near term as Chinese exports double and windfall tax stays.
“De-merger of financial services is a spin-off of RIL’s 6.1 per cent treasury shares (valued at Rs 106 per share); it is baked in our current SoTP and not a value-changer. Upstream shall nearly match retail FY24E Ebitda on high gas prices and further KG-D6 ramp-up. New energy (upgrade) plan towards green H2 shall re-rate valuation, besides huge synergies with existing O2C,” it said.
Motilal Oswal said it valuing the refining and petrochemical segment at FY24 EV/Ebitda of 7.5 times, to arrive at a valuation of Rs 724 per share for the standalone business. The brokerage has ascribed an equity valuation of Rs 960 per share to RJio and Rs 1,252 per share to Reliance Retail, factoring in the recent stake sale.
The oil-to-telecom major last week reported a 0.18 per cent year-on-year (YoY) drop in consolidated net profit at Rs 13,656 crore in the September quarter compared with Rs 13,680 crore in the same quarter last year. Revenues for the quarter rose 33.74 per cent to Rs 2,32,863 crore from Rs 1,74,104 crore in the same quarter last year.