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What Brokerages Made Of Reliance Industries’ Q3 Earnings Performance
Most analysts retained their stance on Reliance Industries on the back of a robust retail business.
20 Jan 2020, 12:53 PM IST
Most analysts retained their stance on Reliance Industries Ltd. on the back of a robust retail business even as its third-quarter operating profit fell the most in more than four years.
The oil-to-telecom conglomerate’s petrochemical and telecom business missed analyst estimates whereas the refining segment’s numbers met expectations. The retail business, however, outperformed yet again.
Opinion
In Charts: How Reliance Industries Fared In The Third Quarter
Here’s what brokerages have to say on RIL’s third-quarter results:
UBS
- Maintain ‘Buy’ with Target Price of Rs 1,750.
- Robust consumer business performance led to another strong quarter.
- Jio adopted lower corporate tax rates, driving net profit higher.
- Strong retail revenue and Ebitda performance were driven by rapid store expansion, operating leverage and efficiency.
Prabhudas Lilladher
- Maintain Buy; cut target price to Rs 1,705 from Rs 1,793.
- Weak refining and petrochemicals profitability drag performance.
- Weak spreads hit profits; E&P performance remain muted.
- Jio and retail profitability continues to remain strong.
Kotak Securities
- Surprisingly weak revenue print; IUC tariff drives a sharp jump in churn.
- Ebitda below expectations despite the IUC delta and further decline in staff costs.
- Net debt rises further, traffic growth weak; fairly weak underlying print.
B&K Securities
- Maintain ‘Buy’ with target price of Rs 1,845.
- Weak petrochemicals and telecom performance.
- New consumer businesses deliver robust growth.
- Positive FCF generation after 20 quarters should cheer the markets.
Axis Capital
- Maintain ‘Buy’; Hike target price to Rs 1,900 from Rs 1,750
- Consumer businesses continue to sustain momentum with positive surprise on revenue.
- Cyclical business was a narrow miss—refining was ahead and petchem was a miss.
- TP hiked as it has been rolled over to FY22.
IIFL Securities
- Extent of outperformance may have narrowed in the third quarter.
- Jio turned IUC positive earlier than expected.
- Enterprise value estimate hiked to $75 billion from $67 billion considering quicker and sharper-than-expected industry recovery.
HDFC Securities
- Maintain ‘Neutral’ with target price of Rs 1,562
- Weak margins across petchem products and higher operating expenses adversely impacted.
- Refining and petchem segments face demand slack, given the impending capacity additions.
- Jio Ebitda margin improved owing to reduction in interconnect charges.
Motilal Oswal
- Maintain ‘Buy’ with target price of Rs 1,820.
- Consumer businesses fuel growth.
- In-line refining throughput and GRM.
- Petchem volumes healthy, margins continue suffering.
Edelweiss
- IUC tariff drives away subscribers, improves profitability.
- Tariff hike to boost profitability further.
- Outcome of AGR liabilities to determine sector dynamics.
Centrum
- Maintain ‘Buy’ with target price of Rs 1,581.
- Downstream woes offset by Jio/Retail momentum.
- Downstream businesses—refining resilient, petchem remains weak.
- Strength in earnings will sustain over next two-three years, complemented by steady reduction in net debt and improving prospects across business segments.
Edelweiss
- Maintain ‘Buy’ with target price of Rs 1,844.
- Refining outperformance offsets weak petchem.
- Retail scales new heights; free cash flow turns positive.
Opinion
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