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RIL after Q2 earnings: Should you buy, sell, or hold the stock?

Consolidated revenue for the quarter came in at Rs 1.74 lakh crore, significantly higher by 49.8 percent compared to Rs 1.16 lakh crore reported in the year-ago period.

October 25, 2021 / 09:35 AM IST
 
 
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Reliance Industries (RIL) share price gained in the early trade on October 25 after company announced its September quarter earnings.

Reliance Industries has reported a consolidated profit of Rs 15,479 crore for the quarter ended September 2021, registering a massive 46 percent increase over the year-ago period.

Profit in the year-ago period stood at Rs 10,602 crore and Rs 13,806 crore in June 2021 quarter. The sequential growth in profit was 12.1 percent.

Consolidated revenue for the quarter came in at Rs 1.74 lakh crore, significantly higher by 49.8 percent, compared to Rs 1.16 lakh crore reported in the year-ago period, said Reliance Industries in its BSE filing, adding that the topline growth on a sequential basis was 20.6 percent.

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Here is what brokerages have to say about the stock and the company post September quarter earnings:

ICICI Direct

The long-term prospects and dominant standing of RIL in each of its product and service portfolio provides comfort for long-term value creation.

RIL’s consumer business will be the growth driver, going ahead. The company has a strong balance sheet while its traditional business is expected to continue to generate steady cash flows.

We maintain our hold rating on the stock with target of Rs 2,900 on an SoTP basis.

CLSA

The research house has kept a buy rating on the stock with a target at Rs 2,820 per share as Q2 standalone and consolidated EBITDA/EBIT/PAT 3-5 percent was ahead of estimates.

It raises the EPS estimates by 3-5 percent and EV for Reliance Retail to $120 billion plus, including $10 billion-plus value accretion for new energy.

Credit Suisse

The broking house has maintained neutral call and raised the target price to Rs 2,450 as it feel that retail and O2C should be strong in Q3.

JioPhone is a next success, crucial for 500 million target. The stock is pricing in EV of $100 billion for Jio, $100 billion for retail and $75 billion for O2C.

Jefferies

The research firm has maintained a buy call with a target at Rs 3,000 after the Q2 EBITDA was in line with the company on beat in retail, in-line O2C and miss in Jio.

The retail's large store addition, improving footfalls and profitability are the key highlights.

However, Jio's 11 million subscriber decline was a key disappointment. The O2C profitability improved sharply and will last through H2FY22, it said.

Morgan Stanley

The research house has maintained overweight call with a target at Rs 2,925 as Q2 earnings beat adds a tailwind to the earnings upgrade cycle.

The refining, broadband subscribers and retail margin should drive 16 percent upgrades in 2022, while pivot to green infrastructure investments also supports multiple expansion.

Elara Capital

We reiterate accumulate and a revised target price at Rs 2,793 from Rs 2,306 on rollover to FY24E.

We assume FY24E EV/EBITDA of 19.5 times for retail, Jio at 17.0x & O2C at 7.0x. We introduce FY24E EPS at Rs 125.7, 14 percent YoY growth on EBITDA improvement in O2C, retail and digital services.

Motilal Oswal

Reliance Retail’s consistent performance over the last 4-5 years has been stellar and offers huge scope of growth

Growth for RJio has slowed in the recent past, despite the significant increase in scale and given the lack of tariff action. However, the success of JioPhone, JioFiber, and new digital investments should offer steady growth opportunities.

Using SoTP, we value the Refining and Petrochemical segment at 7.5x FY24E EV/EBITDA to arrive at a valuation of Rs 775/share for the standalone entity.

We ascribe an equity valuation of Rs 880/share to RJio and Rs 1,200/share to Reliance Retail. We reiterate our buy rating with a target price of Rs 2,900.

At 9:17am, Reliance Industries was quoting at Rs 2,637, up Rs 9.95, or 0.38 percent on the BSE.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Moneycontrol News
first published: Oct 25, 2021 09:35 am

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