What Brokerages Make Of Reliance Jio’s User Revenue Surprise
Here’s how brokerages reacted to Reliance Jio’s maiden earnings report.
Most brokerages upgraded Reliance Industries Ltd. and hiked the target price, after its telecom arm Reliance Jio Infocomm Ltd. showed a robust average revenue per user in the July to September quarter.
The country’s newest telecom operator’s ARPU was Rs 156.4. This figure would had been lower if not for the different approach to calculating revenue, said brokerage house Motilal Oswal.
In effect, we believe that if both the recharges (Q1FY18 and Q2FY18) were accounted on accrual basis, ARPU should have been about Rs 130 for the quarter.Motilal Oswal Report
Apart from a higher revenue base, the company also saw a lower-than-expected operating costs due to capitalised employee expense since the company is in a capacity building phase. Moreover, administrative and selling costs, too, came in lower than estimates, according to brokerages such as Motilal Oswal, IDFC, and Kotak Securities.
In its maiden quarterly filing, Reliance Jio reported an earnings before interest, tax, depreciation and amortisation of Rs 1,443 crore for the three months ended September, while operating margin stood at 23.5 percent.
