Reliance Industries (RIL) share price gained nearly a per cent to Rs 2,508 apiece on BSE ahead of its fiscal first-quarter results scheduled to be released later in the day on Friday, 22 July 2022. On a year to date basis, RIL stock price has gained 4.12 per cent, and 18 per cent in the last one year. Brokerage firms expect Mukesh Ambani’s company’s robust growth in the April-June quarter of the current fiscal on stronger refining profitability, better telecom ARPU, and growth in the retail segment.
Earlier this week, the government slashed windfall tax on domestic crude oil production by 27 per cent to Rs 17,000/tonne. Jefferies noted that RIL will be the key beneficiary of this move as it would lower the impact on its realised gross refining margin (GRM) to around $ 1/bbl compared with US$ 7-9/bbl when the duty was first levied on 1 July 2022.
Analysts at Motilal Oswal Financial Services expect RIL’s O2C and retail to drive strong growth in 1QFY23. The brokerage firm expects a consolidated EBITDA of Rs 424 billion (81% on-year jump, and 35 per cent sequentially), fueled by growth in O2C, Jio and Retail segments. “We project an EBITDA of Rs 255 billion (+123% on-year/ +75% QoQ) for the O2C segment, Rs 109 billion (+27% on-year/+4% QoQ) for Reliance Jio, and Rs 41 billion (+112% on-year/+11% QoQ) for the Retail segment,” it added.
What should RIL investors do?
Analysts at ICICI Direct Research said that the long term prospects and dominant standing of RIL in each of its product, and service portfolio, provide comfort for long term value creation. “RIL’s consumer business will be the growth driver, going ahead,” it said. The company has a strong balance sheet while its traditional business will continue to generate steady cash flows amid a favourable global scenario. “We maintain our BUY rating on the stock,” it added.
Motilal Oswal has pegged a target price of Rs 2,874 apiece. It noted that clarity on the Rs 750 billion announcement in the new energy business, growth in Retail store additions, and any further pricing action in Telecom would be the key monitorables.
On Reliance Jio, ICICI Direct Research said that the monthly ARPU, like peers, will witness growth, driven by residual benefits of tariff hike and higher number of days, at 4% sequentially at Rs 174.
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