Analysts at several brokerage firms believe that Reliance Industries’ Q3 performance was largely better-than-expected, but there was a surprise element in the petchem show.
The oil-retail-to-telecom conglomerate reported a better-than-expected 7.7 percent sequential growth in third quarter consolidated net profit at Rs 10,251 crore, driven by other income as well as telecom and retail segments.
Reliance Group's flagship company became the first Indian private sector corporate to cross Rs 10,000 crore quarterly profits milestone.
Consolidated revenue during the quarter grew 9.1 percent sequentially to Rs 1.56 lakh crore, driven by all key segments.
The year-on-year growth in profit was 8.8 percent and revenue growth was 56.7 percent.
"Increase in revenue is primarily on account of higher price realisations and volumes for petrochemical and refining businesses along with continuing strong growth momentum in consumer businesses," RIL said.
Reliance Jio reported profit at Rs 831 crore for the quarter, higher by 22.1 percent compared to Rs 681 crore in previous quarter and 65 percent compared a year-ago period.
The telecom company has crossed Rs 10,000 crore in quarterly operating revenue within second year of operations. Operating revenue increased 12.4 percent sequentially to Rs 10,383 crore in the quarter ended December 2018.
Jio added 27.9 million subscribers during the quarter, taking total subscriber base to 280.1 million at the end of December 2018.
CLSA sees an upside potential of 32 percent in the stock.
Brokerage: CLSA | Rating: Buy | Target: Rs 1,500
The global research firm said that the company’s Q3 performance beat estimates across segments other than petchem. It said that the retail performance was stellar. Weak petchem was offset by strong performance by other segments, analysts at the firm wrote in their research note.
It sees an upside of 32 percent.
Further, the retail earnings before interest and taxes more than trebled year on year, while consolidated capital expenditure fell 30 percent QoQ.
CLSA also believes that Jio may close a deal within H1CY19 to monetise its tower & fibre assets.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 1,315
The firm observed that petchem was a positive surprise. Refining, Jio and retail were in-line, it observed. Macquarie also sees upside risk to consensus FY20-23 earnings estimates. Going forward, it expects refining margin to strengthen to $15/20/18 In FY20–22.
On financials, it said that 9MFY19 clean EPS was up 14% YoY and comfortably supports FY consensus Of Rs 68/Sh.
Brokerage: Morgan Stanley
Strong subscriber momentum with stable average revenue per user (ARPU) outlook was visible in Reliance Jio’s results. It said that ARPU was lower owing to pick-up in the Monsoon Hungama offer. Company indicates it is likely to hold tariffs at current levels, analysts at the firm wrote in their report.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.