INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: Reliance Industries (RIL) pipped Tata Consultancy Services (TCS) to become the most valued company on Indian bourses
First, domestic mutual funds are gradually reducing their underweightage on the stock to minimise their underperformance against the
Local mutual funds were underweight by 6.7 per cent in their portfolio on the RIL stock compared with the Nifty weight at the end March 2018
According to Bloomberg data, domestic mutual funds such as HDFC MF, Kotak Mahindra, Tata MF have bought RIL in the June quarter
Second, the Street revised its projected earnings estimate upwards by 7-8 per cent after the June quarter result as the company beat its
operating profit by a wide margin
As a result, brokerage houses like CLSA revised target price.
Thirdly, RJio has been able to surprise the Street as average revenue per user
Interestingly, according to the company, only 10-12 per cent of feature phone chose Rs 49 plan and the rest Rs 153
This could support the higher valuation of telecom vertical as analyst may have to advance their higher ARPU estimate from FY20 as compared
The Street is currently ascribing the value of Rs 250-300 per share to RJio.
Lastly, the retail business of RIL sparkled in the quarter
It recorded a 134 per cent growth in revenue in the fourth quarter of FY18
Retail revenue growth in the June quarter again more than doubled to Rs 25,890 crore
If the rate sustains, the current quarterly rate on an annualised basis will translate into revenue crossing Rs 1 lakh crore, which would be
higher than all the organised retail players combined
This could lead to potentially rerating of the retail business.
