RIL’s Q1 show triggers bullish bets

Leading brokerage houses came up with bullish forecasts on RIL’s future earnings prospects, after India’s largest private sector company announced better-than-expected results for the quarter ended June 30.

On Tuesday, RIL stock rallied over 3 per cent in intraday trade.

On Monday, the stock closed at Rs 997.35, up 2%. Among foreign brokerage houses, the forecast from UBS is the most aggressive with a price target of Rs1,400 a year from now, while CLSA expects the stock to double over the next three years.

Analysts say prospects will look rosier once there is clarity on gas price hike from the new government and the company comes up with plans for effective utilisation of the cash on its balance sheet which is about Rs 86,000 crore. RIL has lined up large-scale capital expenditure plans in retail, telecom, and petrochem which is expected to boost operating profits in coming years.

Shares of RIL have risen only 11.5% this year, underperforming the benchmark index. BSE Sensex has rallied 21.5% over the same period. On Saturday, RIL reported a consolidated net profit of almost $1 billion, up 13.7%, for the first quarter of the current financial year 2015.