Reliance Industries: Nomura India broadly retained its FY24 and FY25 Ebitda estimates. This is even as it cut its net income estimates for FY24 by 7 per cent and FY25 by 2 per cent. 
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Reliance Industries: Nomura India broadly retained its FY24 and FY25 Ebitda estimates. This is even as it cut its net income estimates for FY24 by 7 per cent and FY25 by 2 per cent. Nomura India said the forthcoming annual general meeting (AGM) of Reliance Industries is likely to offer next trigger for the stock, as the oil-to-telecom major may provide a roadmap for value unlocking in the retail segment and further updates on new energy business and Jio Financial Services (JFS). For now, the brokerage has maintained its 'Buy' rating on the stock with a target of Rs 2,925. The share price target suggests a 15.33 per cent potential upside over Friday's closing price.
Nomura India has retained its 'Buy' tag on the stock even as a few other brokerages cut rating on the stock, citing limited upside potential after an in-line June quarter results and demerger of Jio Financial Services (JFS).
For now, Nomura India broadly retained its FY24F and FY25F Ebitda estimates. This is even as it cut its net income estimates for FY24 by 7 per cent and FY25 by 2 per cent, as it factored in higher DD&A and interest expenses.
"We reiterate Buy rating with a higher SoTP-based target price of Rs 2,925, on rollover of our valuation to Jun-25F. We note that the outlook across segments remains optimistic: O2C will benefit from strong global oil demand growth of over 2.2mn b/d over H2CY23, CDU additions lagging demand growth by 0.5 million b/d, and global inventory levels remaining well below 5-year average levels across major hubs; sharp volume growth for upstream as MJ field commences production; robust growth for retail underpinned by store additions and operating leverage; and potential upsides for Jio, if FY25 tariff hikes are higher than anticipated," it said.
For the June quarter, the oil-to-telecom major reported a consolidated net profit of Rs 18,258 crore, down 6.09 per cent year-on-year (YoY) from Rs 19,443 crore in the corresponding quarter last year. Profit (attributable to the owners) came in at Rs 16,011 crore against Rs 17,955 crore, down 10.82 per cent YoY. Analysts were largely expecting profit to fall anywhere between 8 per cent and 17 per cent.
Nomura said adjusted net income was above its estimates on higher other income. This was similar to what other analysts said.
Systematix Institutional Equities said RIL’s June quarter revenue and Ebitda were in line with expectations while profit after tax was slightly above estimates due to higher-than-expected other income. This brokerage has cut its target price to Rs 2,550 from earlier Rs 2,766 largely reflecting exclusion of Jio Financial Services (JFSL). The stock is trading at an EV/Ebitda of 10.8 times and PER of 22.7 times on FY25E.
B&K Securities said the RIL stock had a decent rally of 12 per cent in the last one month based on de-merger of financial services business. But now the stock price could remain under pressure in the near-term as O2C Ebitda run-rate at Rs 15,000-16,000 crore is unsustainable as refining margins have normalised lower. "O2C volume is already close to peak and as such, there remains limited space for positive surprise. Besides, Q1 telecom ARPU at Rs 180.50 was lower than Street’s expectation and between Q1FY23-Q1FY24, ARPU has risen by mere Rs 5, whereas Street is building in 8-10 per cent increase in ARPU in FY24F (Rs 15-20)," it said while suggesting a target of Rs 2,841 on the stock.
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