INSUBCONTINENT EXCLUSIVE:
Mumbai: Even as shares of Reliance Industries (RIL) have scaled new highs, analysts remain upbeat on the prospects of the energy-to-telecom
That, even when there is pessimism surrounding GRM projections
The stock has already posted a stellar performance, having rallied 22.7 per cent so far this year to trade at Rs 1,375, far outperforming
price target to Rs 1,500 from Rs 1,402 earlier, implying a $10 billion valuation for its retail business
and organised retail, they now contribute around 25 per cent of Ebitda, which HSBC estimates to rise to 30 per cent by FY21
Reliance Retail is still the fastest growing organised retailer across consumer formats this financial year, and growth may accelerate as it
scales up key formats and launches its digital platform integrating kirana stores.
They have modelled higher revenue growth and
profitability in retail to be offset by lower gross refining margins (GRM) assumptions, leading to an around 8 per cent cut in FY20 earnings
per share (EPS), and thus their FY19-21 estimates change only marginally
There is a structural upside that you are seeing in this counter
While optimism on retail business, along with telecom business was in the air, pessimism surrounding GRMs could be a dampener in the near
term, though long-term outlook remained upbeat
It is trading above our target price
But there are few things going for the stock
Pet coke gasification, which is expected to start from this quarter and divestment of fibre and tower businesses would strengthen balance
target of Rs 1,326, which has already been surpassed.
Anand expressed concern that there was a near-term overhang around GRMs, where the
outlook was a bit negative
