Should you buy RIL share post Q4 results?

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Reliance Industries (RIL) share price fell 2% in early trade on May 3 after the company on April 30 posted 108% year-on-year (YoY) growth in consolidated net profit at Rs 13,227 crore for the quarter ended March 31, supported by 47.50% growth in the bottom line of the company’s telecom arm Reliance Jio. RIL had posted a profit of Rs 6,348 crore in the same period last year. Revenue of the company increased 11% YoY to Rs 1,54,896 crore.

Recovery in downstream cyclical margin and continued strong performance from consumer-centric business have led to most analysts being upbeat about the stock.

Here is what experts have to say:

Sharekhan | Target Price: Rs 2,400 | Upside: 20%

RIL’s PAT to grow at 30% CAGR over FY2021E-FY2023 led by a recovery in downstream cyclical margin and continued strong performance from consumer-centric business. RIL’s efforts to carve out its O2C segment into a separate subsidiary would facilitate strategic partnership with global players (media reports indicate that RIL has already revived discussions with a Middle Eastern oil giant for a possible deal) and help unlock value (although deal structure would play an important role). Further, value unlocking in digital, and retail (IPO likely in next few years) would add value to shareholders’ returns in the coming years.

Moitlal Oswal | Target Price: Rs 2,195 | Upside: 10%

Using sum of the parts model, value the O2C business at FY23E EV/EBITDA of 7.5x, arriving at a valuation of INR713/share for the standalone business and add INR61 for the E&P assets. We ascribe an equity valuation of a) INR755/share to RJio on FY23E 18x EV/EBITDA and b) INR670/share to Reliance Retail on FY23E 31x EV/EBITDA, Higher multiple to the Retail and Digital biz underscores the strong growth in new commerce, coupled with opportunities in the Digital space and tariff rationalization.

Kotak Institutional Equities | Target Price: Rs 2,050 | Upside: 3%

RIL delivered a sustained recovery in operating performance in 4QFY21 with retail revenues and Jio subscriber additions returning back to pre-Covid levels and O2C/upstream contribution rising sequentially. However, miss on Jio’s ARPU, elevated level of capex, recurring adjustments in the balance sheet and limited disclosures remain areas of concern.