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Last Updated : Nov 13, 2019 09:08 AM IST | Source: Moneycontrol.com

Buy Reliance Industries, target Rs 1,610: Anand Rathi

At CMP the stock is trading at 18.1x FY16E earnings and 14.7x FY17E earnings respectively. We recommend a buy on the stock with a target price of Rs 1,610 per share.

Moneycontrol Contributor @moneycontrolcom
 
 
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Anand Rathi

Reliance Industries is India’s largest and most profitable private sector company and continued to be a significant global player in the integrated energy value chain.

The retail business has grown phenomenally, registering a 7-fold increase in revenue and a 14-fold increase in profit in the last six years. Jio has already become the largest operator in India and still signing up more than 10 million new customers each month.

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The two consumer businesses now collectively contribute nearly 32 percent to the consolidated EBITDA, up from 2 percent five years ago and the management is targeting their share to be 50 percent in the next few years.

On the strength of RIL’s existing and new growth engines, the company is confident of growing this by 15% annually over the next 5 years.

RIL and Saudi Aramco have agreed to a non-binding letter of intent (LOI), wherein the latter may acquire a 20 percent stake in the ‘oil-to-chemicals’ division at an enterprise value of USD 75 billion.

RIL have received strong interest from strategic and financial investors in their consumer businesses, Jio and Reliance Retail. The company will induct leading global partners in these businesses in the next few quarters, and move towards listing of both these companies within the next five years which will result in significant value unlocking.

With the investment cycle likely having peaked, we expect RoI trajectory to improve going forward. RJio is now prepared with the roll out of the other revenue engines – IOT, home broadband services, enterprise broadband service and broadband for small & medium businesses. The company will start generating revenue from these businesses from FY20.

At CMP the stock is trading at 18.1x FY16E earnings and 14.7x FY17E earnings respectively. We recommend a buy on the stock with a target price of Rs 1,610 per share.

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

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Nov 12, 2019 01:25 pm
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