Why Reliance Industries stock closed over 3% higher today

The market capitalisation of India's second-largest firm in terms of M-cap rose to Rs 6,49,956 crore.  The stock rose amid reports that brokerage Credit Suisse has initiated coverage and gave a target price of Rs 1,180 assigning 'outperform' rating for the share of Mukesh Ambani-owned conglomerate.

By Aseem Thapliyal  
Tuesday, July 10, 2018

The Reliance Industries stock was the top Sensex gainer today after international brokerages gave a thumbs up on the prospects of the stock. The stock closed 3.02% or 30.10 points higher at 1025.75 level becoming the top gainer on Sensex.  It opened at 1001 level and hit an intra day high of 1028.50 in trade today.

The market capitalisation of India's second-largest firm in terms of M-cap rose to Rs 6,49,956 crore.

The stock rose amid reports that brokerage Credit Suisse has initiated coverage and gave a target price of Rs 1,180 assigning 'outperform' rating for the share of Mukesh Ambani-owned conglomerate.

"We believe refining and petrochemical businesses are well understood but Jio's ability to create significant value from the ecosystem that it is building could make a difference. Jio is much more than a telecom business. Lastly, petcoke gasification should help growth in refining margin of Reliance Industries," Credit Suisse said.

The stock also got a push after a media report said India Gas Solutions, a joint venture between Reliance Industries and BP Plc, would bid for city gas distribution licences in the current auction round.

Meanwhile, Macquarie gave outperform rating to the stock with a potential upside of 25%. The brokerage has given a target price of Rs 1,240 for the stock.

The brokerage expects gross refining margin of the conglomerate to reach $20 a barrel by financial year 2020-21 against the estimated $12 per barrel as RIL is expected to benefit with its refining hub-the world's biggest- in Jamnagar, Gujarat having the ability to process a wide range of distressed crude grades.

The stock is closed 0.88% away from 52-week high of Rs 1,035.80.

The stock has been gaining for the last three days and clocked 6.40% gains during the period.

The stock has gained 37.59% during the last one year and has recorded 11.48% rise since the beginning of this year.

26 of 37 brokerages rate the stock "buy" or higher, five "hold" and six "underperform" or "sell", according to Reuters.

Last week, on July 5, the Reliance Industries stock closed 2.53 per cent lower to 965 level on profit booking after the conglomerate's chairman Mukesh Ambani unveiled a mega fixed-line broadband initiative and announced plans for an e-commerce platform that may rival the likes of Amazon. Earlier, the Reliance Industries stock crossed the 1,000 level in early hours before the conglomerate held its 41st annual general meeting on that day.

Oil-to-telecom conglomerate Reliance Industries reported its highest quarterly net profit of Rs 9,435 crore on record earnings from petrochemical and retail business and rise in profitability of its upstart telecom unit, Jio in Q4 of last fiscal.

Consolidated net profit of Rs 9,435 crore, or Rs 15.9 per share, in January-March was 17.3 per cent higher than Rs 8,046 crore, or Rs 13.6 a share, in the same quarter of the last fiscal, the company said.

While its core petrochemical business posted record quarterly pre-tax profits, earnings from the oil refining business dipped on squeeze in margins.

However, the surprise package was retail which clocked over 200 per cent rise in pre-tax profit.

Helped by rise in earnings across businesses, Reliance Industries posted a record net profit of Rs 36,075 crore in the fiscal year ending March 31, 2018, up 20.6 per cent over Rs 29,901 crore net profit of 2016-17 fiscal.

It had highest ever PBDIT (profit before depreciation interest and taxes) of Rs 74,184 crore.

Reliance Industries is engaged in refining, including manufacturing of refined petroleum products, and petrochemicals, including manufacturing of basic chemicals, fertilizers and nitrogen compounds, plastic and synthetic rubber in primary forms. The company's segments include refining, petrochemicals, oil and gas, organized retail and others.

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