Amid a rally in the shares of India’s most valued company Reliance Industries Ltd, global research and brokerage firm CLSA has sounded a positive note on the Mukesh Ambani-led company’s future prospects given the huge potential from its latest telecom offering — the Jio Phone. The report says that discount reduction in Jio’s smartphone average revenue per user (ARPU) will drive the company’s EBITDA further. The beginning of downstream expansion will drive doubling of EBITDA over FY17-20. CLSA states that JioPhone will drive next leg of growth for Jio after a fabulous first year. Jio has achieved 12 percent subscriber market share a year after its launch. At 01:40 hrs Reliance Industries was quoting at Rs 947.40, up Rs 4.45, or 0.47 percent, on the BSE. It touched an intraday high of Rs 949.80 and an intraday low of Rs 938.00.
CLSA had in September this year maintained a ‘buy’ call on the stock with a target price of Rs 1,050. Its earlier target was Rs 990. CLSA’s target price implies an upside of more than 10 percent from the current market price. The Hong-Kong based firm has raised in the consolidated EPS forecast by 8 percent on the back of TRAI rate cut.
Reliance Industries enjoys the status of being India’s most valued company as the conglomerate commands a market capitalisation greater than Rs 5,50,000 crore, nearly Rs 75,000 crore more than India’s second in command TCS.
The oil-to-telecom conglomerate was the second-most valuable company when the benchmark index had touched 10,000 for the first time in 2006. Though the RIL stock had been underperforming the benchmark for almost eight years till April this year, there had been a sudden spurt in its movement following the launch of its telecom subsidiary Reliance Jio, which started generating cash.
RIL shares have returned more than 74 percent since January, compared to BSE Sensex returns of 26 percent in the same period. Notably, the shares are up by more than 20 percent in the last three months alone. Reliance Industries ranks 203rd in Fortune Global 500 list, a ranking based on total revenue. RIL is one among the only 7 Indian companies on the list.
Reliance Industries’ shares are on a sustained rise on the prospects of fresh incomes from its petrochemicals and refining business’ under-commissioning facilities, and cash flows from its telecom business, which had seen heavy investments till early this year. Analysts feel that the last 8-9 years of the capital expenditure cycle for the company on its petrochemicals and refining businesses has come to an end now, and will going forward yield huge cash flows.