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Last Updated : Oct 16, 2017 12:09 PM IST | Source: Moneycontrol.com

Most brokerages remain positive post RIL Q2 numbers, bet on Jio to be profitable

Brokerages are largely upbeat about the core and operational performance and pin hopes on telecom business to turn profitable soon. Further, they also expect increase in GRMs as well.

 
 
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Shares of Reliance Industries fell on profit booking after it rose around 2 percent intraday on Monday. Investors were seen digesting September quarter earnings from the company that was declared on Friday.

The company reported consolidated profit at Rs 8,097 crore for the quarter ended September 2017, a growth of 12.8 percent compared to year-ago quarter but registered a 10.8 percent decline from previous quarter. Numbers except bottomline beat analysts’ expectations.

Revenue from operations grew 5 percent sequentially and 16.5 percent year-on-year to Rs 95,085 crore in second quarter of FY18, driven by growth across segments - petrochemical, refining, organised retail and digital businesses.

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"Another quarter of robust performance includes the financial performance of Reliance Jio which had a positive EBIT contribution in its first quarter of commercial operations," Mukesh Dhirubhai Ambani, Chairman and Managing Director, Reliance Industries said.

The results also reflected strong underlying fundamentals of refining and petrochemicals businesses, he added.

Brokerages are largely upbeat about the core and operational performance and pin hopes on telecom business to turn profitable soon. Further, they also expect increase in GRMs as well.

Brokerage: CLSA | Rating: Buy | Target: Rs 1,080

The research firm highlighted that the company had in line core performance but was a miss on PAT due to high tax rate. It estimates Jio to be profit making from the very first year, while EPS estimates for FY18/19/20 will rise 25/16/12 percent. It expects supply of JioPhone to stablise soon and could be the next big trigger.

Brokerage: Edelweiss | Rating: Buy | Target: Raised to Rs 1,104

Edelweiss highlighted that the company’s strong operative competitiveness and healthy consumer traction enhance its conviction. Further, commissioning of Grandiose USD 20 billion core projects could bolster earnings. Having said that, it believed that the company’s GRM disappointed, while robust petchem, new projects could revive earnings.

Brokerage: IDFC Sec | Rating: Neutral | Target: Rs 850

IDFC Securities said that telecom has made a splash, but there is momentum in the price. It raised FY18/19 EPS by 34/7% to factor the stronger telecom segment earnings. Meanwhile, E&P remains a laggard, it said, adding that net debt remains elevated and GRMs below estimates.

Brokerage: JPMorgan | Rating: Neutral | Target: Raised to Rs 820

The global research firm said that petchem has offset sluggish refining, while average revenue per user (ARPU) pick-up is the key and debt remains high. It increased FY18-20 EPS estimates by 6-13 percent.

Brokerage: Kotak Sec | Rating: Reduce | Target: Raised to Rs 835

The brokerage house raised FY2018-20e consolidated EPS to Rs 54, 60 & Rs 66, respectively. Current enterprise value of Rs 7.6 lakh crore is seen, discounting clean recurring EBITDA of about Rs 1 lakh crore.

Brokerage: Motilal Oswal | Rating: Upgrade to buy | Target: Rs 1,005

The brokerage house believed that the company could clock GRM of USD 11.5 per barrel going forward. Further, it said that Reliance Jio would remain the key to stock performance and raised Jio’s valuation to Rs 245.

Brokerage: Morgan Stanley | Rating: Overweight | Target: Raised to Rs 1,040

The research firm raised earnings forecasts by 11-29% for FY18-FY20. It added that telecom monetisation is treading a year earlier than expected and consolidation in the sector could set the stage for surprises in 2018.

The stock gained around 11 percent in the past one month, while its three-day gain stood at 3 percent. At 12:06 hrs, Reliance Industries was quoting at Rs 871.60, down Rs 5.10, or 0.58 percent on the BSE. It touched a 52-week high of Rs 891.70.

(Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)

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First Published on Oct 16, 2017 12:09 pm
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