Jaideep Goswami, Head of Equity at ICICI Securities told CNBC-TV18, "Reliance Industries' (RIL) Q2 bottomline number has come in line. One needs to understand that the company is working on the face of a not so great oil and gas performance, but it has stepped up the gear in refining business and of course petrochemical margins have shown a very positive trend in the particular quarter."
He further added, "Overall the numbers are very positive and one would obviously expect that there will be some incremental growth in oil and gas production. This quarter they have done 14 mmscmd. Going forward, we are talking about 16-17 mmscmd, that is a slight growth, but the real trigger in the stock is likely to come from gradual increase in capacity in petrochemical and polyester business over next 12-18 months. There will be very frequent capacity addition."
"So there would be a volume related story going forward and roughly more than 90 percent of EBITDA is now coming from refining and petrochemical, not from oil and gas. So it has to consistently perform in terms of gross refining margins (GRMs). We have Rs 1,122 as the target price on RIL," Goswami said.
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