In past three weeks, RIL has outperformed the market by surging 10% as compared to 4% rise in the S&P BSE Sensex.
Thus far in the financial year 2018-19 (FY19), the stock was up 14% against 8% surged in benchmark index. In entire FY18, RIL had rallied 34% against 11% gained in the benchmark index.
RIL’s consolidated annual revenues in FY18 grew significantly at 30.5% over FY17 to Rs 4,307 billion with a net profit of Rs 361 billion as against Rs 298 billion, an upside of 21% over the previous year.
“The healthy performance can primarily be attributed to a strong execution in the petrochemicals, refining and its flagship digital services business. The robust performance from the retail business has also contributed to the company’s sturdy achievement. The company’s petrochemical business has surpassed the refining business in terms of EBIT and EBIT margins supported by higher realization for the products along with improved volumes from the refinery off-gas cracker (ROGC) cracker,” analysts at KR Choksey Shares and Securities said in result update.
The brokerage firm believes that RIL has now neared the completion of its 3-lakh crore capital expenditure cycle and these investments will now begin to deliver by way of improved margins and boosted cash flows. The ROGC cracker has been fully stabilized in this quarter which will help to produce high value polymer derivatives from low-cost fossil fuels resulting in lower feed stock costs for the company. In addition, the petcoke gasification project complimented by the rise in the crude prices will further help to improve the company’s financial performance.
Nevertheless, with the telecom (Jio business) segment exhibiting a secured performance for the quarter, we expect the segments financials to improve further due to its growing popularity, increasing market share, highly competitive price tariffs and a strong operating leverage, it added. The brokerage firm recommends BUY rating on the stock with the target price of Rs 1,442/share based on SOTP methodology.
At 02:21 pm; RIL was trading 0.80% higher at Rs 1,010 on the BSE, as compared to 0.4% decline in the S&P BSE Sensex. A combined 3.97 million shares changed hands on the counter on the BSE and NSE so far.