Buy Reliance Industries; target Rs 931: Firstcall Research

Firstcall Research is bullish on Reliance Industries (RIL) and has recommended buy rating on the stock with a target price of Rs 931 in its February 26, 2013  research report.

"RIL is India’s largest private sector company on all major financial parameters with a turnover of INR 3397920 millions. BP and RIL are planning to invest in a series of projects to develop around 4 trillion cubic feet of discovered natural gas resources from the KG D6 block. RIL and Petroleos de Venezuela, SA (PDVSA) signed a 15 year heavy crude oil supply contract. RIL has signed a $ 2 billion equivalent loan with nine banks covered by Euler Hermes Deutschland AG. RIL has selected Fluor Corporation to provide project management services for its projects being executed at its refining and petrochemical complex in Jamnagar, India. RIL retained its domestic credit ratings of AAA from CRISIL and FITCH and an investment grade rating for its international debt from Moody’s and S&P as Baa2 and BBB respectively. Net Sales of the company is expected to grow at a CAGR of 18% over 2011 to 2014E.

The company’s net profit increases to Rs. 55020.00 million against Rs. 44400.00 million in the corresponding quarter ending of previous year, an increase of 23.92%%. Revenue for the quarter rose 10.28% to Rs. 938860.00 million from Rs. 851350.00 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 17.04 a share during the quarter, registering 25.72% increase over previous year period. Profit before interest, depreciation and tax is Rs. 101130.00 millions as against Rs. 90020.00 millions in the corresponding period of the previous year.

Outlook and Conclusion: At the current market price of Rs.823.95, the stock P/E ratio is at 13.01 x FY13E and 12.64 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.63.35 and Rs.65.20 respectively. Net Sales of the company is expected to grow at a CAGR of 18% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 6.92 x for FY13E and 6.44 x for FY14E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 931 for Medium to Long term investment," says Firstcall Research report.

FIIs holding more than 30% in Indian cos

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