Hold Reliance Industries; target of Rs 990: Geojit

Geojit's research report on Reliance Industries

RIL reported 18% YoY growth in standalone revenue in Q4FY18 primarily due to robust performance of its petrochemicals division (↑46% YoY). Standalone EBITDA margin expanded by 19 bps to in Q4FY18 driven by strong Petchem margins led by higher volumes. However, net profit increased at a slower pace of 6.7% YoY due to sharp increase (↑521% YoY) in interest expense.

Outlook

We expect revenue/net profit to grow at a CAGR of 13%/9% over FY18-20E led by healthy GRMs and strong growth momentum in the petchem segment. Despite strong outlook, we downgrade the stock to ‘HOLD’ with a revised TP of Rs990 based on SOTP valuation due to rich valuations.