Brokerages retain buy rating on RIL after Q2 results

After Reliance Industries' second quarter net profit beat street estimates, most brokerages have rated the company scrip as 'outperform' and 'a buy'.

RIL posted a consolidated net profit growth of 1.7 percent at Rs.5,972 crore, while net sales increased marginally to Rs.96,486 crore from Rs.96,351 crore during the same period.

Barclays retained overweight rating on RIL stock with a target price of Rs.1,100. The brokerage finds the risk-reward ratio favourable with valuations at a 12 percent discount relative to its history and at a 15-23 percent discount to global peers.

Axis Bank retained the buy rating on RIL stock with a target price of Rs.1300, saying it expected EPS at compound annual growth rate of 16 percent over the fiscals 2014-17 led by new capacities in petrochemicals and petcoke gasification, firm cyclical margins, and incremental gas production.

"Additional upsides possible from clarity on telecom rollout, monetization of retail venture, improvement in cyclical margins," it said.

ICICI Securities maintained the buy rating on RIL at the target price of Rs.1,300, saying it factors "valuations from incremental projects being commissioned over three to four years".

JP Morgan, however, remained neutral on RIL with a price target of Rs.1,035, as it sees "little near-term catalysts" while uncertainties such as natural gas policy and telco profitability remain as significant overhangs on the stock, with potentially weak GRMs (gross refining margins) and petchem spreads going forward.

RIL stock closed Wednesday at Rs.961.10 a share, up 3.25 points, or 0.34 percent, over its previous close on the Bombay Stock Exchange (BSE).