Most brokerages are bullish on Reliance Industries shares after the Mukesh Ambani-controlled company yesterday surprised the street with much better-than-expected gross refining margins in the fiscal first quarter which boosted its financial results, lifting the quarterly net profit up by as much as 28% on-year. At the same time, however, analysts have turned their eyes on the upcoming AGM of Reliance Industries later today, and are keenly watching for any updates on the company’s plans or announcements regarding Jio.
RIL Chairman Mukesh Ambani is widely expected to launch a low-cost 4G-enabled feature phone handset, which may help its disruptive telecom venture Jio rapidly expand the footprint further, even as its earlier service offerings have already taken the Indian industry by storm.
Research and brokerage firm CLSA said that it is keenly watching the upcoming Reliance Industries AGM for clarity on Jio and other downstream projects. CLSA said that Reliance Industries posted a strong core performance in the fiscal first quarter led by GRMs and strong petrochemicals business, which helped set-off a higher loss in the oil & gas business.
Reliance Industries Ltd’s fiscal first quarter net profit grew 28% on-year to Rs 9,108 crore, while the company’s April-June revenue rose 27% on-year to Rs 90,537 crore. The rise in earnings was broadly in line with the expectations, and was helped by strong showing in its petrochemicals business, which saw increased volumes due to a recent increase in capacities. Reliance Industries again surprised on GRM, which was reported at $11.9 per barrel, growing from $11.5 barrel in the last quarter, against most analyst expectations.
Morgan Stanley maintained its ‘overweight’ rating on Reliance Industries shares with a target price of Rs 1,506, which is actually below the current market price. RIL shares are firm today, up 3% at Rs 1,575 on BSE. Morgan Stanley said that it expects the energy business to drive upside for Reliance Industries shares, while its refining business remains resilient. The company’s capital expenditure is slowing down and is running within estimates, Morgan Stanley added.
Bank of America Merrill Lynch maintained its ‘neutral’ rating on RIL shares with a target price of Rs 1,585, even as it said the focus has now shifted to the AGM for updates on Jio and chemical projects. BofA ML too believes that Reliance Industries’ capital expenditure is now likely to peak. Credit Suisse, which maintained its ‘neutral’ rating on Reliance Industries’ shares with a target price of Rs 1,360, too said that further clarity on the company’s telecom business is awaited.
Brokerage firm Citi is the most bullish of the lot on Reliance Industries’ shares, maintaining its ‘buy’ rating with a target price of Rs 1,750, which implies an upside of about 11% from the current market price. Citi said that stellar refining margins and strong petrochemicals show have helped the company beat expected financial results in the first quarter.