Shares of Reliance Industries (RIL) rose over 2 per cent on the Bombay Stock Exchange (BSE) on Thursday as Morgan Stanley remained bullish on the stock, expecting strong growth in retail and telecom businesses in December quarter (Q3FY20).
The global brokerage Morgan Stanley has maintained an 'overweight' stance on the Mukesh Ambani-led oil-to-telecom conglomerate. The agency has revised target price of RIL to Rs 1,753, saying that the company's third quarter earnings should be strong on the back of steady growth in retail and telecom businesses.
Cheering the news, share price of Reliance Industries gained as much as 2.24 per cent to touch an intraday high of Rs 1,547.95 against previous close price of Rs 1,513.95 on the BSE. The stock gave 40 percent return in the last one year, helped by consistent growth in telecom and retail business.
On the National Stock Exchange (NSE), shares of Reliance Industries were trading 1.69 per cent higher at Rs 1,538.65 apiece. The stock opened higher at Rs 1,538.60 and hit a high of Rs 1,547.95 in early deals.
Analysts at Morgan Stanley expect recovery in energy refining business after facing headwinds in the first half of 2019.
"We estimate earnings to be flattish YoY and down 2 per cent sequentially," Moneycontrol quoted the brokerage as saying. The brokerage expected gross refining margin may average $9.40 a barrel, up 7 per cent on year-on-year (YoY) basis. On the quarter-on-quarter (QoQ) basis, the gross refining margin is expected to be flat.
Morgan Stanley expects EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) of telecom segment to rise 13 per cent on QoQ basis, citing that the company has started recovering interconnect cost.
"We estimate 15 per cent QoQ and 21 per cent YoY decline in petrochemical EBIDTA, but we estimate retail revenues to rise 31 percent YoY, largely similar to Q2 growth," Morgan Stanley reportedly said.
Earlier in September last year, RIL's retail arm, Reliance Jio, had claimed that it paid Rs 13,500 crore to other operators as IUC charges in three years. IUC charges are tariffs that the network from which the call originates have to pay to the called network. In a bid to pass on the IUC burden to the customers, RIL had announced that it would levy an additional charge of 6 paise per minute as IUC charges.
During September quarter (Q2 FY20), Reliance Jio reported a 45.4 per cent growth in standalone net profit at Rs 990 crore as compared to Rs 681 crore during the year-ago period. Overall, Reliance Industries posted 18.6 per cent jump in its net profit at Rs 11,262 crore in Q2FY20. The company reported the highest ever revenue of Rs 163,854 crore, up 4.8 per cent on yearly basis, thanks to robust growth in retail and digital services businesses, which offset weakness in the refining, oil and gas and petrochemical business.
By Chitranjan Kumar