Brokerage house Motilal Oswal has suggested a buy on Reliance Industries Limited. RIL is expected to gain 15% in the coming 12 months. Post the quarterly results announced on Friday, the brokerage house shared that the scrip would trade to Rs 1005 present in 12 months.
The scrip was trading at Rs 864 on the BSE, at the time of writing this piece.
Analysts at the brokerage house suggested that Reliance Industries’ (RIL) 2QFY18 standalone EBITDA rose 23% YoY (+12% QoQ) to INR129.8b, largely in line with estimates of Rs 126 billion. PAT rose 7% YoY (+1% QoQ) to INR82.6b, below estimates of Rs 88.2 billion, due to higher interest expense of Rs 13 billion (est. of Rs 9.4 billion) and a higher tax rate at 27.9% v/s 22% in 1QFY18 and 24% in 2QFY17.
Interest expense was higher due to forex loss of Rs 4.5billion.
The gross refining margin of $12/bbl was below the estimates of $12.6, while refining throughput of 18.1mmt was ahead of the estimated 17.5mmt.
Speaking on Reliance Jio, analysts conceded that the telco unit delivered a stellar performance. Revenues of Rs 61.5 billion, led by ARPU of Rs 156, coming partly from 1QFY18 recharges.
"In effect, we believe that if recharges from both 1QFY18 and 2QFY18 were accounted on an accrual basis, ARPU would have been nearly Rs 130 for the quarter. Data consumption remained 4-5x of Bharti, while MOUs are 50% higher, with 3.8bGB of data consumption."
"In 2HFY18, we expect addition of 42 million subscribers, taking the overall subscriber base to 181 million by March’18 and 205 million by March’19, from 139m in 2QFY18, with ARPU estimates of INR156/INR172 in FY18E/FY19E," added analysts.
