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Brokerages retained their mixed view on Reliance Industries (RIL) after the company on Friday reported a 7.25% year-on-year (YoY) fall in consolidated net profit as higher expenses affected gains across businesses from oil to telecom and retail. The company reported a profit of Rs 12,273 crore for the quarter ended June 30 against Rs 13,233 crore in the same period last year. Consolidated total income increased by 57% YoY to Rs 1,48,591 crore.
Shares of the company traded 0.53% up at Rs 2116.35 in the early trade on Monday, while the benchmark BSE Sensex was down by 0.04% at 52,957.
Consolidated total expenditure of the energy-to-telecom behemoth jumped to Rs 1,31,284 crore in Q1FY21 over Rs 87,406 crore in the same period last year.
Should you invest?
Overseas firm JP Morgan retained ‘Neutral’ call on Reliance Industries with a target price of Rs 2,250. It believes that Q1 earnings are unlikely to help stock reverse underperformance. On the other hand, Japanese brokerage firm Nomura maintained a ‘Buy’ call on RIL with a target price of Rs 2,400. “First quarter EBITDA came in line with estimates,” it said.
On the downside, Macquarie retained the ‘Underperform’ call on RIL with a target price of Rs 1,350. It said that Reliance Jio and Reliance Retail both missed estimates in Q1FY22.
Other business updates and target prices
Among the other business updates, the operating profit of the oil-to-chemicals (O2C) business increased on better refining and petrochemical margins. The segment EBITDA jumped 50% to Rs 12,231 crore. Jio Platforms posted a 45% growth in net profit to Rs 3,651 crore in April-June as it added over 4.2 crore net subscribers. However, average revenue per user stood flat at Rs 138.40 per month during the quarter under review.
Morgan Stanley has an ‘Overweight’ call on RIL with a target price of Rs 2,262. It added that earnings quality was good with energy in the driver’s seat.
Commenting on Q4 results, Mukesh Ambani, chairman and managing director, Reliance Industries said, “In our O2C business, we generated strong earnings through our integrated portfolio and superior product placement capabilities. Along with our partner bp, we commissioned the satellite cluster in KG D6 and continued to ramp up production, contributing to 20% of gas production in India. This will be a major contribution to our country’s energy security.”