Buy Relaince Industries; target of Rs 1200: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Reliance IndustriesThe crude oil prices have tumbled down to around $43 per barrel, around 42% lower YoY and 12% lower sequentially in Q3FY2016. The falling crude oil prices have turned out to be a boon for the refiners with low feedstock, which is reflecting in strong benchmark gross refining margin (GRM). During Q3FY2016, the Singapore GRM improved sequentially to $8 per barrel in Q3FY2016 and Reliance Industries Ltd (RIL) is poised to record a hefty premium over the same. We expect RIL’s GRM to cross $11 per barrel in this quarter and remain substantially higher (YoY) for FY2016. Going forward, commissioning of petcoke gasification project is likely to be accretive to refinery margin. In the petrochemical segment, the lower cost of feedstock (crude oil derivatives) and relatively stable product realisations have resulted in an improvement in margins. We have revised our earnings estimate to factor in lower crude oil prices and better margin for RIL. We have revised down our revenue estimate by around 15% to factor in lower crude oil prices. However, we have revised upward our earnings estimate by around 7-8% due to the prominent refining margin improvement trend. As the earnings are likely to witness strong growth, we have revised upward our price target to Rs 1,200 (earlier Rs 1,100) based on sum-of-the-parts (SOTP) valuation and reiterate Buy rating on the stock.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their 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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