Why Kotak Institutional raised RIL target price to Rs 1,825

Mumbai: Kotak Institutional Equities raised its target price on energy-to-telecom conglomerate Reliance Industries to Rs 1,825 from Rs 1,725 earlier, implying an upside of 16 per cent from current levels.

The brokerage attributed improved economics for Jio, healthy underlying refining margins and potential deleveraging of balance sheet led by rising OCF, moderating capex and inorganic transactions behind the target price revision.

The brokerage also raised its consolidated EPS estimates for RIL to Rs 76 (+2 per cent) in FY2020, Rs 92 (+3 per cent) in FY2021 and Rs 107 (+4 per cent) in FY2022 factoring in higher profits/OCF (operating cash flow) from Jio, modestly lower capex and net debt and other minor changes.


“Recent developments in the telecom sector have set the stage for higher ARPU for all players with largely unchanged relative attractiveness for Jio and weaker balance sheet of competition, but for any partial waiver on AGR liabilities,” Kotak analysts said in a report.

RIL shares have risen 40.36 per cent for the year to date, smartly outperforming benchmark Sensex which logged 13.42 per cent gains in the same period.