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Hot stock! Reliance Industries shares set to give windfall profit! Should you buy? This is what makes RIL top stock pick for investors
Reliance Industries posted its Q3FY19 result in late evening of Thursday and under this the company’s consolidated net profit jumped 8.8% to Rs 10,251 crore compared to a net profit of Rs 9,420 crore a year ago same period.
Reliance Industries share price was among the top picks of investors on Dalal Street today. This comes after the big Q3 announcements. After all the company has set new records during its December, 2018 (Q3FY19) quarter. It is the consistent growth RIL logs that has made investors quite optimistic on the company. It's not just investors, even experts now see RIL as a money making magnet ahead. At around 12:49 hours, RIL shares were trading at Rs 1,150.15 per piece, above by Rs 16.50 or 1.46% on BSE. However, the company had gained over 2% on the index after it touched an intraday high of Rs 1,156.55. What is in it for you, the investor?
Well, if you plan to invest in equities with the intention of getting rich fast, you might want to have a piece of Reliance Industries, as its shares are seen giving a magnificent 30% return to its investors ahead! Firstly, the Mukesh Ambani led Reliance Industries has once again earmarked its position as the largest company of India with a market cap of Rs 7,29,102.23 crore compared to TCS, which enjoyed this glory for some time. TCS’ market cap today is at around Rs 7,07,868.61 crore on BSE at around 12:49 hours.
Reliance Industries posted its Q3FY19 result in late evening of Thursday and under this the company’s consolidated net profit jumped 8.8% to Rs 10,251 crore compared to a net profit of Rs 9,420 crore a year ago same period. Consolidated revenue from operations stood at Rs 171,336 crore in Q3FY19, registering growth of whopping 55.9% as against Rs 109,905 crore in same period of previous year.
Not only Reliance Industries, even its telecom arm, Reliance Jio, which is widely seen as a disruptor in telecom field (customers of Jio, of course, do not mind as it has brought dirt cheap data offers in its wake), also showed massive growth in back-to-back quarters.
Reliance Jio witnessed a net profit of Rs 831 crore in December 2018 (Q3FY19) quarter, which was an increase of massive 65% compared to net profit of Rs 504 crore in Q3FY18.
In a very proud moment, Mukesh Ambani, Chairman & Managing Director, Reliance Industries Limited said: “In our endeavor to consistently create more value for our country and stakeholders, our company has become the first Indian private sector corporate to cross Rs 10,000 crore quarterly profits milestone."
As the man said, Reliance Industries has becomes the first private company to log over Rs 10,000 crore profit in a quarter and this surely, reflects the growth of the energy-cum-telecom company in coming days.
Why should you invest in Reliance Industries shares? Let's find out!
Analysts at Elara Capital said, "We remain positive on margin and volume expansion of petchem due to ROGC plant benefits and earnings growth from telecom (Jio) and retail. We revise our TP to Rs 1333 from Rs 1372 as we reduce our FY21E GRM from USD 12.5/bbl to USD11.5/bbl. Our SOTP-based TP assumes 1-yr fwd (FY21) EV/EBITDA @7.5x for Petchem and refining, @8.0x for retail, @5.0x for domestic E&P and @8.0x for Jio."
On the other hand, Sharekhan says, "Maintain Buy rating with unchanged PT of Rs 1,465."
Giving rationale to their rating, Sharekhan says, ": We have lowered our FY2019E EPS to factor in the weakness in refining margins (due to lower gasoline cracks) but largely maintain our FY2020E EPS. We have also introduced our FY2021E EPS of Rs88.8."
कल #HUL और #RIL पर सटीक रही @smcglobal के नितिन मुरारका की कॉल, आज आने वाले @Wipro और #NIITTech के नतीजों से पहले जानिए डेरिवेटिव स्ट्रैटेजी।@AnilSinghviZEE @dkalra81 @nitinmurarkasmc pic.twitter.com/pPiq83lbrz
— Zee Business (@ZeeBusiness) January 18, 2019
Sharekhan added, " We maintain our Buy rating on the stock with an unchanged price target (PT) of Rs. 1,465 as we believe that likely strong subscriber additions in telecom business, sustained high growth in retail business and boost to refining margin from IMO regulations would act as key catalyst for the stock. At the CMP, the stock is trading at 13.5x its FY2020E EPS and 12.8x its FY2021E EPS."
Jal Irani and Vijayant Gupta analysts at Edelweiss Securities said, "With the transfer and eventual sale of tower and fibre assets expected by March 2019, we expect value creation as: 1) past demergers (RIL-RCOM in 2005, Adani Enterprises in 2018 and Arvind group companies) have created over 40% value; 2) it is likely that RIL has lined up strategic buyers for eventual monetisation; and 3) a sale would lead to ~33% dip in debt with over INR1tn debt locked up in these assets."
The duo added, "Lower opex led to refining EBIT declining by just 5% despite 7% fall in GRM. With ROGC and ethane imports exceeding 100% utilisation, petchem margin remained stable. Retail margin expanded to 4.7% led by strong LFL growth of ~20% and robust store additions. RJIO’s revenue market share rose to 36.7% with another 28.7 million net subscriber additions and stable ARPU at Rs 130. In a welcome move, capex declined QoQ to Rs 270bn and is expected to continue on this trajectory in the future."
Following which, Edelweiss finally said, "A demerger of non-core telecom assets could prove to be a game changer—in one go, RIL deleverages sharply, while also monetising these assets potentially at a large premium to book value. With the petcoke gasifier on schedule for March 2019 and an imminent FTTH roll out, there are multiple triggers for an upside. We maintain ‘BUY’ with TP of Rs 1415/share."
From the above, it is quite clear that Reliance Industries is set to give some hefty returns to its investors. But the potential does not end here for it, in fact, this Mukesh Ambani led company has been given a buy rating by CLSA with a price target of Rs 1,500.
On Reliance, CLSA said, "Compared to over 3x rise in indian retail, organised retail may rise 9x in 10 Yrs. Co’s omni-channel strategy has all the ingredients to make it a leader." Hence, retains buy with Rs 1,500 target.
If we take into consideration the CLSA target on RIL and its intraday high today, then the company has the potential to surge by some 30% in a year.
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