Rs 100 crore profit a day! Watch out for a much bigger RIL in the making

NEW DELHI: For a long spell, this stock was depressed. The promoters sat on huge cash pile and kept raising cheaper funds at the same time. The company diversified into several new areas simultaneously, and investors were beginning to question where it was really headed.

Today, Mukesh Ambani-led Reliance Industries ( RIL) makes approximately Rs 100 crore profit a day. On Thursday, the company posted consolidated profit of Rs 9,079 crore for the quarter ended June 30, 2017 compared with Rs 7,077 crore posted for the same quarter last year.

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More than 70 per cent of the listed companies on NSE reported less than Rs 100 crore net profit for the financial year ended March 31, 2017.

Recent developments, including the launch of Reliance Jio Infocomm, expansion and fresh investments in other areas such as retail and media have made the oil-to-telecom conglomerate a top choice among analysts.

Some brokerages expect the stock to rise close to 30 per cent over the next one-and-a-half years.

“The fundamentals of the company have been improving significantly. You can see a much larger Reliance Industries going forward in the times to come,” Deven Choksey, MD, KR Choksey Shares and Securities, said in an interview with ETNow.

RIL’s consolidated revenue increased 26.71 per cent YoY to Rs 90,537 crore during the quarter.
Gross refining margin (GRM), the difference between crude oil price, a major raw material, and average selling price of refined products, came in at $11.9 a barrel for the quarter, compared with $10 a barrel that analysts had projected in the ETNow poll.

RIL’s GRM was better than the Singapore complex margins by $5.5 a barrel.

Since the beginning of 2017, shares of the company have surged over 40 per cent to Rs 1,528 till July 20.

Sushil Choksey, Director, Indus Equity, sees the RIL stock at Rs 1,700 by December 2017 and at Rs 2,000 in 2018.

During the quarter, the RIL-BP alliance announced monetisation plan for discovered resources in KGD6 block, having a combined resource potential of 3 TCF. Development of the three fields with total investment of $6 billion is expected to bring in 30-35 MMSCMD of new domestic gas production on stream, phased over 2020-2022.

Brokerage Sharekhan has a ‘buy’ rating on the RIL stock with a target price of Rs 1,665. “Any positive surprise in terms of better-than-expected financials of the telecom business would be an important re-rating trigger for RIL going forward,” it said.

Shares of the company opened 1.75 per cent higher at Rs 1,555 on Friday.

Edelweiss Securities believes commissioning of the grandiose $20 billion core projects will bolster earnings, boost RoE and turnaround free cash flow (FCF). “We maintain a ‘buy’ rating on RIL with a target price of Rs 1,782,” the brokerage said.