Accumulate Reliance, target price Rs 1,937: Angel Broking

Angel Broking has given an accumulate rating to Reliance Industries with a target price of Rs 1,937. The share price moved up by 1.29 per cent from its previous close of Rs 1760.35. The stock’s last traded price is Rs 1783.10.

Reliance Industries is India’s largest company with a dominant presence in refining, petrochemicals, telecom and retail businesses. RIL has built up a dominant telecom business -- Reliance Jio -- and has already attained market leader status with 38.3 crore subscribers at the end of Q4FY20.

Investment Rationale

The brokerage says the telecom business will witness robust growth over next few years due to tariff hikes and shift of subscribers from Vodafone Idea to other telecom players. RIL has also built a very strong retail business which is the largest organised retailing company in India.

The brokerage expects the retail business to be a key value driver for Reliance over the long run though there would be some impact on business in FY21 due to the Covid-19 outbreak. Refining and petrochemicals business would be a stable low growth business for RIL going forward but will be a major cash generator for the company as there will be negligible capex requirements. The cash flows would be used to fund expansion into other businesses.

Quarterly Results
Source: ETMarkets.com

Financials

For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 136240.00 crore, down -11.06 per cent from last quarter sales of Rs 153179.00 crore and down -2.40 per cent from last year's same quarter sales of Rs 139590.00 crore. The company has reported net profit after tax of Rs 6575.00 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 49.15 per cent stake in the company as of June 11, 2020 while FIIs held 24.17 per cent, DIIs held 13.37 per cent and public & others 13.31 per cent.