Reliance Industries Ltd, incorporated in the year 1973, is a Large Cap company with a market cap of Rs 13,48,694.62 Crore, operating in Diversified sector.
Reliance Industries Ltd’s key Products/Revenue Segments include Refinery, Petrochemicals, Other Services, Oil & Gas, Income From Financial Services, Others for the year ending 31-Mar-2020.
Investment Rationale
Reliance Jio: Motilal Oswal assigns an EV/EBITDA multiple of 18x on FY23 EBITDA, with a target price of Rs 755/share (for its 66 per cent stake). The higher multiple captures digital revenue opportunity, potential tariff hikes, and opportunity in the Feature Phone market (not built into its estimates).
Retail: Motilal Oswal values Reliance Retail’s core business at 31x FY23E EV/EBITDA and assign 4x to Connectivity, arriving at the target price of Rs 670 – after excluding the recent 10 per cent stake sale. Its premium valuation multiples capture the accelerated growth in new store openings, digital commerce, and the new JioMart platform.
O2C business: RIL expects demand for PVC, PP, and Polyester to remain firm on account of strong downstream demand. Although, a) large cracker capacity additions globally (~12mmtpa each over 2020–21) and b) the supply glut amid higher exports from China are likely to threaten current multi-year high margins.
Motilal Oswal values the O2C business at FY23E EV/EBITDA of 7.5x, arriving at a valuation of Rs 713/share for the standalone business and adds Rs 61 for the E&P assets. Hence, Motilal ascribes an equity valuation of Rs 755/share to RJio on FY23E 18x EV/EBITDA Rs 670/share to Reliance Retail on FY23E 31x EV/EBITDA, factoring in the recent stake sale and reiterates buy rating, with a target price of Rs 2,195/share.
Financials
For the quarter ended 31-03-2021, the company has reported a Consolidated Total Income of Rs 158133.00 Crore, up 23.11 per cent from last quarter’s Total Income of Rs 128450 Crore and up 12.65 per cent from last year same quarter’s Total Income of Rs 140373 Crore. Company has reported a net profit after tax of Rs 14981 Crore in the latest quarter.
