Reliance Industries reports Q3 results: What should investors do now?

Reliance Industries Q3: Revenue from operations for the quarter ended December 2022 (Q3FY23) came in at Rs 220,592 crore, up 15.32 percent

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Reliance Industries will be in focus on January 23 after the company reported its December quarter earnings last Friday.

Reliance Industries (RIL) on January 20 said its revenue from operations for the quarter ended December 2022 (Q3FY23) came in at Rs 220,592 crore, up 15.32 percent against Rs 191,271 crore a year ago.

Its consolidated net profit for the quarter stood at Rs 17,806 crore, down 13.30 percent year-on-year (YoY).

The company had reported a net profit of Rs 20,539 crore in the same quarter last year.

Company officials said higher finance costs were due to interest rate hikes by central banks and higher loan balances.

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Here is what brokerages have to say about stock and the company post December quarter earnings:

Prabhudas Lilladher

Maintain ‘buy’ with a price target of Rs 2,878 (Rs 2,909 earlier)

The broking house cut FY23-25E earnings by 4 percent/0.3 percent to factor in 1) higher finance charges due to rising interest rates 2) lower other income and 3) higher tax charges due to lower tax credits.

The Q3 benefitted from strong refining performance offset from lower throughput due to planned maintenance along with weak polymer and polyester margins.

Retail segment saw healthy growth as outlets operated normally, while Jio reported steady performance given no tariff hikes and customer additions (+1.2 percent QoQ).

Motilal Oswal

Reiterated ‘buy’ rating on the stock with an SoTP-based target price of Rs 2,800.

Brokerage house revise its capex estimates for FY23/FY24 to Rs 1,700 billion /Rs 1,000 billion from Rs 1,650 billion/Rs 750 billion, respectively, building in Rs 1,262 billion/Rs 280 billion in telecom, Rs 350 billion/Rs 350 billion in the standalone business and the rest in others.

Using SOTP, broking firm value the refining and petrochemical segment at 7.5x on December 24 EV/EBITDA to arrive at our valuation of Rs 879/share for the standalone business.

It ascribe an equity valuation of Rs 809/share to RJio and Rs 1,270/share to Reliance Retail, factoring in the recent stake sale.

Nomura

The research firm has maintained ‘buy’ rating on the stock with a target at Rs 2,850 per share amid robust O2C performance and healthy consumer business.

There are upsides for Jio and O2C on the cards, while net debt and capex may rise further.

Telecom tariff hike deferred, albeit change in market construct on cards again.

Research firm cut FY23 EPS forecast by 6 percent and retain FY24-25 EPS on factoring lower Jio EBITDA and FY24-25 EPS is partly offset by higher O2C and upstream, reported CNBC-TV18.

Jefferies

Brokerage house has kept ‘buy’ rating on the stock with a target at Rs 3,110 per share with EBITDA beat in O2C and Jio, while retail was in-line.

Strong store additions and improving footfalls paint a strong growth outlook in FY24. However, Jio’s sub additions were a tad lower, but rapid 5G Roll-out should drive strong growth.

O2C benefited from strong diesel spreads and cheap crude blending and Chinese demand recovery can lead to earnings upside in FY24.

The company’s Capex remains elevated, reported CNBC-TV18.

JPMorgan

Broking house has kept ‘overweight’ rating on the stock with a target at Rs 3,015 per share as the EBITDA, PAT beat driven by sharp O2C jump.

The energy to remain key earnings driver in CY23.

The O2C, E&P drive beat and should further improve from Q3 as underlying cracks steady.

The China re-opening should further support energy business, while retail was relatively strong.

Jio’s soft ARPU’s were broadly flat while non-Jio digital business was strong, reported CNBC-TV18.

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