Analysts Hike Target Price For Reliance Industries After Q2 Results

Most analysts hiked their target price on Reliance Industries Ltd. even as its standalone operating profit for the quarter ended September missed estimates on the back of lower volumes and weaker gross refining margins.

On a consolidated basis, this weakness was largely offset by rising profits in its consumer businesses—retail and telecom. The consumer businesses now contribute about a third to the operating profit of India’s biggest company by market value.

Net profit rose to the highest in 15 quarters aided by a lower tax rate and higher other income.

Here’s what brokerages have to say about RIL Q2 Results 2019-20

Centrum Broking

• Maintains ‘Buy’ and hikes target price to Rs 1,650 per share from Rs 1,495.
• Second-quarter performance was lower than expected impacted by refining segment.
• Expects strength in earnings to sustain over the next 2-3 years.
• Continuing the transition to a balanced conglomerate with material consumer portfolio.

Credit Suisse

• Maintains ‘Neutral’ with a target price of Rs 1,210 apiece.
• Consumer electronics segment had an exceptional quarter.
• Petrochemical was a beat due to higher volumes.
• Refining Ebitda was a miss due to very high conversion cost.

UBS

• Maintains ‘Buy’ with a target price of Rs 1,500 apiece.
• Delivered another strong quarter despite commodity headwinds.
• Petchem production at record high.
• Remains focused on ramping up JioFiber infrastructure and strong subscriber addition.

Kotak Securities

• Maintains ‘Buy’ and hikes target price to Rs 1,550 from Rs 1,425.
• Higher contribution from Reliance Jio Infocomm Ltd. and Reliance Retail and other income mitigated weak downstream performance.
• Net debt peaked with rising cash profits adequately covering for declining capex.
• Transactions/projects to gather pace in the near term.

Motilal Oswal

• Maintains ‘Buy’ and hikes target price to Rs 1,630 from Rs 1,414
• Consumer businesses drive the quarter.
• Better-than-expected gross refining margin negated by lower throughput.
• Reliance Retail maintains strong performance in a slowing economy.

Antique Broking

• Maintains ‘Buy’ and hikes target price to Rs 1,555 per share from Rs 1,350.
• Weakness in petroleum business was offset by strong profitability of consumer business.
• Investment cycle comes to conclusion; debt reduction to follow.

SBICAP Securities

• Maintains ‘Buy’ and hikes target price to Rs 1,690 per share from Rs 1,670.
• Net profit boosted by lower taxes; refining Ebitda below estimate.
• Petchem Ebitda in line with weak margin offset by higher volume.
• Reliance Jio’s focus on driving market share gains, ramping up fibre-to-home and enterprise and reducing capex.

Prabhudas Lilladher

• Maintains ‘Accumulate’ and hikes target price to Rs 1,395 per share from Rs 1,360.
• Muted refining and petrochemicals profitability drag performance.
• Higher volumes make up for weak petchem spreads.
• Profitability to get lift from higher gross refining margin and commercialisation of petcoke gasification project.