RIL In For An Upgrade Of Estimates & Targets: Prayesh Jain

RIL In For An Upgrade Of Estimates & Targets: Prayesh Jain

Lower other income, extremely good petchem margins and nine-year high GRM figure – what is your take on RIL’s numbers?

Prayesh Jain: This is an exemplary performance by Reliance Industries. In particular, I will talk about the refining segment, where globally benchmarked GRMs have been weak and sequentially they were expected to fall. In that scenario, RIL delivered a sequential improvement. Going ahead, you have petcoke gasifiers commencing operations towards the second half of the financial year.

Going further into FY19, full scaling up of the petcoke gasifiers you can only expect further improvement in GRMs from here on. On the petchem side again, RIL posted the highest EBIT margins since Q2 of FY10 and this is an exemplary performance. We were expecting solid performance for that segment, but this has definitely beaten expectations.

Operationally, the company posted a very strong set of numbers, which definitely calls for an upgrade in estimates and targets. We will take a final call post the AGM and analysts’ meet.
ET Now: For a stock that has already gained about 11.5 per cent in last three months, we already know that the RIL stock has been sitting at a nine-and-a-half year high. How much more headroom does this stock have on the basis of these numbers?

Prayesh Jain: If you go by the rerating for RIL, it has not yet been rerated in a big manner the way some other companies or sectors have seen. Empirically, RIL has seen a modest performance in terms of earnings growth, but that seems to be changing now.

 On earnings, possibly Jio will put some pressure in FY18, but FY19-FY20 onwards, you will see earnings growth for the consolidated entity. So there is further room for rerating the stock.

ET Now: What is it that you were looking out for from the AGM and the conference call?
Prayesh Jain:The main thing to watch out for would be more clarity on the recently announced oil and gas initiatives. Possibly we will get more clarity as to what kind of projects they are taking up.

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Last time around, they had just mentioned broader aspects and possibly some granularity will be there. On Reliance Jio, one would like to see what further initiatives they would be taking.

Source Link – The Economics Times

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