RIL m-cap jumps Rs 32,000 crore post Q2 results; share price targets, things to watch

Shares of Reliance Industries Ltd (RIL) climbed 2 per cent in Monday's trade, with its market capialisation rising over Rs 32,000 crore, after the company reported a healthy set of September quarter results. Analysts said the focus should now be shifted to 5G monetisation, given R-Jio’s 5G rollout is nearing completion. Recent Jio AirFiber launch, Kotak Institutional Equities said, is the first step.

With rising subscriber base and consumer engagement on 5G, this brokerage believes there is a case to raise tariffs soon. "Post 15 per cent decline since recent peak, risk-reward is now favourable. We upgrade RIL to BUY; revised fair value of Rs 2,725," the brokerage said.

ICICI Securities said it does see earnings momentum supported by retail, upstream and RJio for FY24E. "However, O2C prospects may come under pressure for H2FY24E due to a slump in key product spreads in October, while progress on the new energy business, improvement in cash flows/return ratios will be key monitorables," it said.

This brokerage has a target of Rs 2,585 on the stock. Prabhudas Lilladher finds the stock worth 2,618 while Nuvama Institutional Equities sees it at Rs 2,950.

YES Securities said the long-term growth engine for RIL is now focused on New Energy and 5G, where the capex will remain elevated. It noted that RIL is aggressively investing and partnering with other businesses across the Green Energy value chain with over Rs 75,000 crore investment.

"For 5G rollout - Telecom business, Jio has started launching of 5G and planned to cover all Indian cities by the end of 2023. The capex needs to be supported by an increase in ARPU - tariff hike for 4G/5G subscribers," it said.

Nomura India has maintained its "Buy' rating on the stock with a target of Rs 2,925. It said Reliance Jio net subscriber additions were strong but average revenue per user (ARPU) growth was modest. Nomura said Reliance Retail witnessed a robust growth and margin expansion and that the volumes in the E&P vertical rose on commencement of the MJ field. The O2C segment, it said. saw robust refiling margins, partly offer by a decline in petchem.

Jefferies upped its share price target for the oil-to-telecom major to Rs 3,000 from Rs 2,095 earlier. Macquarie has increased its target on the stock to Rs 2,200 from Rs 2,100.

"F25e P/E of 18.8 times is a 26 per cent discount to peers and 10 per cent below its five-year average, despite improving ROCE. The stock implies below mid-cycle energy earnings and no upside from wireless broadband plans. As net debt peaks and monetisation of $35bn capex picks up, we see attractive risk-reward," Morgan Stanley said.

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