In an interview to CNBC-TV18, Jal Irani, Oil & Gas Analyst, Edelweiss Financial Services spoke about what to expect from Reliance Industries fourth quarter numbers.
Reliance Industries in its press release talked about how downstream expansion projects are broadly on schedule in terms of commissioning. These projects account for 40 percent of the company’s investments in the past five years. These are large projects that would come in to fruition.
Irani says while the market has been focusing on Reliance Jio, the company’s core businesses which are refinery and petchem related, USD 20 billion of projects are seeing fruition and these projects are very profitable. They will quickly start making money, he adds.
The house, he says has hiked their target price on RIL to Rs 1600. He also expects the company to turn free cash flow positive, which could be in the region of Rs 25000 crore to start with this year.
“When RIL gets into free cash flow phase, the stock price tends to rise very sharply,” says Irani.
According to him, Reliance Jio currently is more of a value driver than profit driver. The profit drivers currently are the core businesses.
For more details on his rationale for being upbeat on RIL, watch videoDisclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com