RIL heading for Rs 1,600: Expert
Shares of RIL may have surged quite a bit over the past three months, but there is more steam left in it, says Rajen Shah, Chief Investment Adviser, Tradebulls. In an interview with ETNow, Shah pegged December end target for RIL at Rs 1,600. Excerpts
ET Now: At Rs 1,400, is there money to be made in Reliance Industries in next one year. If yes, how much?
Rajen Shah: In January, on your channel we had given a very strong buy call on RIL and we had confidently mentioned that it will touch Rs 1,600 by December this year. The stock has already seen about 38-40 per cent spurt in first three months of the year and I think it still has got about 15 per cent upside over the next six to eight months.
So we need to keep this in mind that in 2008, RIL posted Rs 15,000 crore net profit and this year it will be posting Rs 30,000 crore net profit. Over the past nine years, profit has doubled but the stock was at Rs 3,200 in 2008, adjusted for bonus it was Rs 1,600. And today, after nine years, the stock is at about 11-12 per cent below the price of 2008 despite doubling the net profit.
I think Rs 1,600 is the bare minimum target we are looking out for RIL. After that, probably we will see the earnings next year and accordingly raise our target. In the short term, it is going to take a while in the telecom business – we are seeing Bharti report 50 per cent drop in net profit, Idea going into losses and all that. But we need to keep in mind that RIL is still the cheapest stock in the frontline space, trading at 14 times last year earnings. That way it is still very cheap.
ET Now: At Rs 1,400, is there money to be made in Reliance Industries in next one year. If yes, how much?
Rajen Shah: In January, on your channel we had given a very strong buy call on RIL and we had confidently mentioned that it will touch Rs 1,600 by December this year. The stock has already seen about 38-40 per cent spurt in first three months of the year and I think it still has got about 15 per cent upside over the next six to eight months.
So we need to keep this in mind that in 2008, RIL posted Rs 15,000 crore net profit and this year it will be posting Rs 30,000 crore net profit. Over the past nine years, profit has doubled but the stock was at Rs 3,200 in 2008, adjusted for bonus it was Rs 1,600. And today, after nine years, the stock is at about 11-12 per cent below the price of 2008 despite doubling the net profit.
I think Rs 1,600 is the bare minimum target we are looking out for RIL. After that, probably we will see the earnings next year and accordingly raise our target. In the short term, it is going to take a while in the telecom business – we are seeing Bharti report 50 per cent drop in net profit, Idea going into losses and all that. But we need to keep in mind that RIL is still the cheapest stock in the frontline space, trading at 14 times last year earnings. That way it is still very cheap.
