BackReliance Industries stock price will react to Q4 numbers on Monday. Should you Buy/Sell?
In Q4FY23, the Mukesh Ambani-backed RIL earned the highest ever quarterly profits driven by strong operating performance of mainstay O2C business, optimised feedstock cost, and supportive product margins. The retail and telecom arm also witnessed stable growth.
PremiumOil-to-energy conglomerate, Reliance Industries (RIL) stock price will be in focus on Monday's trading sessions after the Q4 numbers for FY23. It is expected that RIL's stock may react positively toward the fourth quarterly performance. Experts are upbeat and a majority of them have given a 'Buy' recommendation.
Manish Chowdhury, Head of Research at Stoxbox said, "Reliance Industries delivered robust numbers due to good operating performance, with growth momentum across all businesses."
In Q4FY23, the Mukesh Ambani-backed RIL earned the highest ever quarterly profits driven by strong operating performance of mainstay O2C business, optimised feedstock cost, and supportive product margins. The retail and telecom arm also witnessed stable growth.
RIL registered a PAT of ₹19,299 crore up by 19.11% YoY and 22.21% QoQ. EBITDA came in at ₹41,389 crore up by 21.8% YoY. O2C business reported a record EBITDA of ₹16,293 crore in Q4FY23 surging by 14.4%. However, consolidated revenue stood at ₹211,887 crore up by 2.1% YoY but lower by 1.9% sequentially.
Further, Chowdhury added, " The company’s telecom business was able to deliver record revenues and EBITDA, led by the full impact of tariff hike, a ramp-up of wireline services and continued subscriber addition for mobility services. It launched True 5G services which are now available across 2300 cities and towns in India. Its retail venture had another quarter of strong progress due to growth in Grocery, Consumer Electronics, and Fashion & Lifestyle."
However, he also said, "their O2C business revenue declined due to sharp reduction in crude oil prices and lower price realisation of downstream products. However, the O2C segment posted its highest-ever operating profit despite global uncertainties and disruptions in commodity trade flows."
He also pointed out that RIL’s implementation of new energy Giga factories at Jamnagar is making significant progress as a stepping stone in the green energy sector.
Meanwhile, Morgan Stanley in its note added, "Overall earnings were 7% above consensus estimates adjusting for the lower tax rate, which normalised due to a higher tax rate in the earlier part of F23. Full year tax rate stood at 21.3%, slightly higher as tax credits reduced. The last two years of internal cash profits have funded the last two years of $30 billion in investments (ex-spectrum). Management highlighted the weaker Re/USD and working capital led to higher net debt. RIL for the first time mentioned it plans to maintain Net debt/EBITDA below 1, despite the upcoming investments."
Stoxbox's expert believes RIL is ticking the right boxes and is becoming a threat to established players in sectors wherein it has entered recently. The nimble footing and changing dynamics of the company’s overall business make it attractive as a long-term play.
According to Stanley's note, RIL's net debt was flat QoQ to $13 billion with the capex run rate increasing to $5.4 billion for the Mar-23 quarter. RIL invested $17 billion in capex – similar to the last capex cycle peak. Spectrum liabilities stood at $15 billion with CWIP rising to $14.3 billion. Foreign ownership in Mar-23 was near a 7-year low at ~24%.
On the stock price, Abhijeet Bora, DVP Research Analyst at Sharekhan by BNP Paribas said, "continued strong traction in its consumer-centric business to drive strong earnings growth for RIL and likely IPO for Jio/Retail remains catalyst. RIL is our top pick and we have a Buy rating on the stock."
Further, Avishek Datta – Research Analyst, Prabhudas Lilladher has recommended a 'Buy' rating for a target price of ₹2,834 on RIL.
RIL announced its Q4 results after market hours on Friday last week. Hence, the stock price will fully witness the impact of the financial results on Monday. On BSE, RIL stock finished at ₹2,348.90 apiece marginally up compared to the previous session.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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