Reliance Industries reported a 32 percent year-on-year growth in net profit for the quarter ended March, even as revenues declined 1.4 percent. For the full year, the company’s revenues rose 9.2 percent and net profit by 4.8 percent. Here is what analysts have to say on their outlook for the stock after the latest set of earnings numbers:
Goldman Sachs Rating: Buy Target: Rs 1070 Rationale: We continue to believe that RIL’s major capex in core segments will lead to a structural improvement in its margins and cash returns over the medium term.
UBS Rating: Buy Target: Rs 1050 Rationale: We expect 1) FDPs approvals for work-over and successful updates from ongoing exploration drilling to raise KG-D6 production visibility; 2) policy clarity on gas-price hike post 2014 & CBM pricing and 3) firm GRMs to drive outperformance.
Barclays Rating: Equal Weight Target: Rs 870 Rationale: Near-term earnings may remain sluggish, therefore; we forecast a 5% CAGR over FY13-15 despite higher gas prices and the commissioning of the PFY, PET and PTA projects over the next 12 months.
Citi Rating: Neutral Target : Rs 898 Rationale: While valuations limit downside, we believe the stock will remain a market performer near term, with back-ended earnings growth from the new projects being offset by lack of material near-term catalysts, declining gas volumes, and no refining upsides.
HSBC Rating: Underweight Target: Rs 835 Rationale: We expect downstream margins to remain under pressure in near term, given the weakening demand outlook, coupled with increasing supply. Outlook for new businesses better but not significant yet, given the size of the company.
Jefferies Rating: Hold Target: Rs 814 Rationale: We cut our FY14/15 estimates to factor lower gas volumes and lower petrochemical margins. Our concerns on low return profile and no near term turnaround in core businesses remain.
Morgan Stanley Rating: Overweight Rationale: Increased contribution from Shale Gas and higher Petchem profitability should drive F2014 earnings growth. In F2016, we see a major lift to earnings as part of Petchem expansion and Petcoke gasification plants are commissioned.
Nomura Rating: Buy Target: Rs 1000 Rationale: We continue to believe that a recovery in petrochemicals is not far. With its ongoing mega petchem expansion getting closer to completion, RIL would reap advantage of a cycle upturn. Even as continuing decline in KG-D6 production is concern, the earlier acrimony with government seems to have subsided.
Kotak Securities Rating: Reduce Target: Rs 840 Rationale: We expect a rebound in margins from current low levels but rule out sustained high global refining margins, given adverse supply-demand dynamics medium term. We do not see a meaningful growth in RIL’s earnings before FY2017, when the petchem plant, petcoke gasification unit and KG D-6 satellite fields will start operations.
Motilal Oswal Rating: Neutral Target: Rs 867 Rationale: While, turnaround in organized retail business is positive, any meaningful earnings addition is expected only in FY16/17, when its large projects (petcoke gasification/off-gas cracker) commissions. Core business outlook (90% of earnings) continues to remain subdued.
Deutsche Bank Rating: Buy Target: Rs 1040 Rationale: Bullish due to due to improving visibility on monetization of its hydrocarbon resources and the expected approval for a gas price hike. RIL will also benefit from its USD12 billion capex in the downstream business.