Reliance Industries’ shares extend gains; should you buy or sell?

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Published: January 21, 2019 4:50:17 PM

Shares of Reliance Industries surged 4.36 per cent to end the day at Rs 1,234.50 on Monday.

Six of top-10 most valued cos add Rs 1,08,274 cr in m-capRIL  recorded a profit of Rs 9,420 crore in the year-ago quarter. RIL became the first Indian private company ever to record a Rs 10,000 crore profit in a quarter.(Reuters)

Shares of Reliance Industries surged 4.36 per cent to end the day at Rs 1,234.50 on Monday. The stock surged nine per cent in the past two trading days on BSE, after the company reported a stellar consolidated net profit of Rs 10,251 crore in the quarter ending December. The company recorded a profit of Rs 9,420 crore in the year-ago quarter. RIL became the first Indian private company ever to record a Rs 10,000 crore profit in a quarter.

Should you buy or sell?

CLSA

The global brokerage maintains a ‘buy’ call on RIL with a target of Rs 1500 on account of strong performance by retail and telecom segments. CLSA has cut FY19-21 EPS estimates by 3 per cent to 9 per cent.

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Macquarie

The global brokerage maintains ‘outperform’ on RIL with a target of Rs 1,315. Macquarie expects the refining margin to strengthen to $15/20/18 in FY20-22.

Kotak Institutional Equities

The brokerage has ‘sell’ call on the stock with SoTP-based future value of Rs 1,070. The brokerage revised RIL’s FY19-21 consolidated EPS to Rs 67 (-1%), Rs 78 (n/c) and Rs 89 (+1%), factoring in revised crude price and exchange rate assumptions; lower refining margins; higher petchem volumes; higher retail contribution and lower Jio contribution.

“The recent sharp deterioration in refining and petchem margins may compound woes in the near term. We find the stock expensive at 9.6X FY20e Ebitda, 14.5X FY20e EPS and 1.8X March 2020e BVPS, adequately factoring in a strong medium-term growth, while ignoring uninspiring return metrics of 8-9% RoCEs, 9-10% CRoCI and 12% RoE,” it said.

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