Buy Reliance Industries; target of Rs 1250: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Reliance IndustriesReliance Industries Ltd (RIL) reported another quarter of strong margin on both refining as well as petro-chemical segments. In line with our estimate, the operating performance was strong with a Y-o-Y growth of 24% and a sequential growth of 4%. Also, its profit after tax (PAT) grew by 14% YoY and remained elevated like the last quarter at Rs7,320 crore. Apart from strong gross refining margin (GRM) of $10.8 per barrel, the petro-chemical margin remained robust at 14% in the low absolute product prices environment. However, the profitability in exploration and production (E&P) business was affected substantially with lower realisation and languishing volume. On the positive side, the retail business continued to sustain healthy growth and registered a 26% profit before interest and tax (PBIT) growth YoY. Consequently, RIL’s consolidated earnings grew by 13% YoY and was flat sequentially to Rs7,227 crore in Q4FY2016. Given the recent improvement in crude oil prices, the benchmark GRM is expected to cool off slightly in short term but RIL should continue to maintain a healthy premium over that. Further, large capital expenditure (capex) in downstream business is likely to yield positive result from the end of FY2017. Therefore, we expect RIL’s downstream business will continue to drive the earnings for the next two years, though oil & gas business will remain subdued. Reliance Jio was launched for the group employees and other associates on a trial basis, which will be upgraded to commercial launch in a couple of months. Hence, further clarity on the services and initial response to that would be the near-term trigger for the stock. We have introduced FY2018 earnings estimate in this report and revised our price target to Rs1,250 by rolling over our multiple to FY2018E earnings. We have retained our 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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