Following the firm’s decent performance in the first quarter, shares of Mukesh Ambani-led Reliance Industries surged to all-time high levels on Monday. We take a look at whether we should buy or sell shares.
Following the firm’s decent performance in the first quarter, shares of Mukesh Ambani-led Reliance Industries gained as much 2.82% on Monday morning. RIL shares surged to an intra-day and lifetime high of Rs 1,157.55 on BSE this morning. Notably, in the latest quarter, the oil-telecom conglomerate has reported Q1 results in-line with analyst estimates. RIL has reported an 18% on- year rise in net profit to Rs 9,459 crore. Last fiscal same quarter, the company had reported net sales at Rs 90,537 crore and net profit at Rs 9,108 crore (including an exceptional income of Rs 1,087 crore), respectively.
Taking stock of the earnings reported in the latest quarter, Morgan Stanley said that earnings were largely in-line with above consensus estimates. The strong chemical and telecom contributions from Reliance Jio kept EBITDA 5% above estimates, the research firm said. Morgan Stanley has a target price of Rs 1,230 on the shares. RIL shares were trading at Rs 1,139 this morning. Morgan Stanley’s target price implies an upside of nearly 8% from the current price levels. The Petrochemical business reported a revenue of Rs 40,287 crore, up 58.2% on-year. Reliance Jio posted another profitable quarter with a 20% expansion sequentially in net profit for Q1 as a result of strong user additions. Furthermore, Jio added 28.7 million customers in Q1 of the running financial year, compared to 26.5 million in the last quarter.
In its report, Kotak Institutional Equities said that the EBITDA is up 12% on quarter, ahead of its initial estimates. However, the net profit was impacted by a decline in other income as well as an increase in finance cost. Kotak Institutional Equities ruled out any material upgrade to EPS estimates. Further, Jio’s higher revenue was offset by a rise in operating costs. The firm has a reduced rating on the shares.
The ongoing quarter has indeed been significant for the firm, as the market value of Reliance Industries zoomed past Rs 7 lakh crore mark in the morning trade, making it the second company after TCS to achieve this milestone, earlier this month. The company also reclaimed its position in the $100 billion club, for the first time in the last 10 years.