Brokerages were largely positive on Reliance Industries after the oil-to-telecom conglomerate’s March quarter earnings, reported after market hours on May 6.
The energy sector giant, which has operations in telecom and organized retail as well, reported a 22.5 percent year-on-year growth in consolidated net profit at Rs 16,203 crore for the given quarter, which missed analysts’ expectations on account of a one-time impairment charge.
However, the conglomerate’s consolidated revenues soared 36.8 percent on-year to Rs 2.1 lakh crore for the March quarter, which was in-line with Street’s expectations driven by higher sales in the traditional energy business.
RIL’s operating performance in the quarter was the highlight as consolidated operating profit jumped 27.7 percent on-year to Rs 33,968 crore, comfortable beating even the most optimistic estimate among the six brokerages polled by Moneycontrol.
“One of best earnings growth stories among India’s large-caps,” said brokerage firm CLSA India as it raised its earnings per share (EPS) forecast for the next two years by 5-9 percent on account of higher margins in the refining business.
The refining business was the key driver of the performance for RIL in the March quarter as the segment’s operating profit surged 25 percent on-year while revenues grew over 44 percent from the year-ago quarter.
Brokerage firm Jefferies India said that the refining business looks strong in 2022 due to geopolitical developments while the cash-cow petrochemical business could see challenges on account of lockdown in China.
“With earnings boosted by energy inflation, RIL could act as a safe haven in today's context,” Jefferies India said as it retained its “buy” rating on the stock.
Brokerage Goldman Sachs India expects the earnings momentum for RIL to pick up sharply in the coming quarters, which will help drive upgrades in Street’s earnings estimate for the company. RIL’s stock performance in the past has been closely correlated to Street’s views on its earnings outlook.
Goldman Sachs expects 50 percent growth in operating profit of RIL in 2022-23 and 21 percent rise in 2023-24. Further, the brokerage firm expects full integration of JioMart with WhatsApp to also drive stock performance.
On May 6, shares of Reliance Industries closed 0.5 percent at Rs 2,628 on the National Stock Exchange.
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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