RIL stock hits a new high as profitability improves

MUMBAI: Shares of Reliance Industries hit a record high of Rs 1,035.8 on Thursday after its annual report analysis by some of the brokerages highlighted robust improvement in profitability, operating cash flow (OCF) and return ratios.

The stock which has rallied 45 per cent in the past one year as compared to 14 per cent rise in the Sensex ended 1.22 per cent higher at Rs 1,032.35 on Thursday.

Reliance Industries recently commissioned some of its petrochemical and downstream projects which will add further value to the company’s business, said analysts.


“The return ratios of the company improved sharply led by commercialisation of several capex-heavy businesses—RJio, refinery off-gas cracker, down-stream units and ethane project” said Manoj Bahety, analyst, Edelweiss Securities. “Scale up of aforesaid capacity along with commissioning of pet coke gasification project is likely to yield significant operating leverage benefits.”

At least 29 of the 39 analysts covering the stock have a buy rating with an average target price of Rs 1,085.

“Reliance Industries is among our preferred large-cap picks given the strong margin outlook for the downstream business and improving profitability of its telecom venture” said Gaurav Dua, head Research, Sharekhan. “We have Buy rating on the stock and see potential for 8 per cent to 10 per cent in the near to medium term.”

In a recent note, the rating agency Crisil said that RIL’s strong market position helps it operate its petrochemical plants at full utilisation and benefit from its large scale of operations and high level of vertical integration.

“These operating efficiencies support RIL’s strong profitability in the petrochemicals segment”.