Emkay Global said Reliance Industries Ltd (RIL) reported a largely in-line earnings for the December quarter. The domestic brokerage said oil-to-chemicals O2C business and Reliance Jio Ebitda, both saw a slight miss on its estimate, which were albeit offset by better Upstream (due to lower opex) and in-line Reliance Retail numbers.
Capex run-rate reduced to Rs 30,100 crore, which was against Rs 39,000 crore each in the September and June quarter, it noted.
Net debt was up 1 per cent sequentially to Rs 1.19 lakh crore, due to pay-down of creditors for capex. RIL, said Emkay, stated that its new energy giga complex would be commissioned in phases, starting H2CY24.
"We broadly maintain FY24-26E earnings, but raise our SOTP-based target price by 8 per cent to Rs 2,950 per share, on the back of higher new energy value (1.5 times EV/IC) as development progresses (giga factory commission, green H₂ PLI win for 90ktpa, etc), higher Jio EV/Ebitda target (11 times versus 10.5 times earlier on strong subscriber growth, peer rerating), and rollover to December= 2024 earnings estimates," it said while suggesting an 'ADD' rating on the stock.
The oil-to-telecom major had on Friday clocked a 11 per cent year-on-year (YoY) rise in net profit at Rs 19,641 crore for the December quarter as compared with Rs 17,706 crore in the same quarter a year ago.
The Mukesh Ambani-led company saw its gross sales for the quarter rising 3.2 per cent to Rs 2,48,160 crore compared with Rs 2,40,532 crore YoY. Ebitda for the quarter stood at Rs 44,678 crore, up 16.7 per cent YoY while Ebitda margin at 18 per cent were up 210 basis points YoY.
RIL technical outlook
Santosh Meena, Head of Research, Swastika Investmart said Reliance Industries has broken out of a multi-month consolidation pattern with a bullish Glag formation near its 20-day moving average (DMA).
"This technical setup suggests the potential for further upside towards the Rs 2,900 level. However, options data hints at some resistance near the Rs 2,800 strike price, as call writers seem confident at that level. Therefore, a decisive break above Rs 2,800 would be needed to overwhelm these call writers and fuel further gains. On the downside, the 20-DMA at 2650 acts as a strong support level," Meena said.
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