RIL Q1 net may rise 20% to Rs 5380 cr: KR Choksey

KR Choksey has come out with its first quarter (April-June) earnings estimates for oil & gas sector. The brokerage house expects Reliance Industries (RIL) to report a 4 percent degrowth quarter-on-quarter (growth of 20 percent year-on-year) in net profit at Rs 5380 crore.

Revenues are expected to increase by 12 percent Q-o-Q (2 percent Y-o-Y) to Rs 94018 crore, according to KR Choksey.

Earnings before interest and tax (EBIT) are likely to rise by 6 percent Q-o-Q (up 23 percent Y-o-Y) to Rs 8324 crore.

KR Choksey report on Reliance Industries

Even though refining margins are expected to be stagnant on account of lower product spreads and light heavy differential, we expect RIL to benefit from the recent gas price hike in the long run; production ramp up is expected to come in a span of 3-4 years.

On the petchem side and refining side too RIL is likely to benefit from the up gradation programmes like petcoke regasification and petchem expansion (despite pressures on the global/ benchmark refining and petchem margins). Therefore, we have an accumulate rating on the stock with a target price of Rs 990 based on SOTP valuation.