“We keep earnings unchanged as limited new information on near-term targets were shared. No major new capex was announced,” Jefferies said while maintaining a buy rating with a target price of Rs 2,950.
During the AGM, Ambani didn’t share update on growth ambitions or the timelines of a potential IPO of Reliance Retail but analysts expect him to likely spin off/IPO Jio and Retail during his current tenure.
Here’s what top brokerages said on RIL:
Kotak Equities
In Jio, post 5G roll-out capex will slow down. RIL reiterated that capex will be funded by cash flows, and net-debt/EBITDA will remain below 1X. We finetune RRVL valuation after stake-sale. Revise FV to Rs 2,600. Retain ADD.
Nomura
We maintain our Buy rating with a TP of Rs 2,925. The outlook across segments remains optimistic: (1) O2C will likely benefit from strong global oil demand growth of over 2.2mn b/d over 2HCY23, CDU additions lagging demand growth by ~0.5 mn b/d, and global inventory levels remaining well below 5-year average levels across major hubs; (2) robust growth of retail underpinned by store additions and operating leverage, and (4) potential upsides for Jio, if FY25 tariff hikes are higher than anticipated.
Motilal Oswal
Applying the SOTP methodology, we value the Refining and Petrochemical segments at 7.5x EV/EBITDA, arriving at a standalone business valuation of INR904/share. We ascribe an equity valuation of Rs 750/share to RJio and Rs 1,485/share to Reliance Retail, factoring in the recent stake sale and an equity valuation of Rs 16/share pertaining to New Energy on book value. We reiterate our BUY rating with a TP of Rs 2,920.
ICICI Securities
While our estimates suggest a solid 18.6% CAGR in earnings over FY23-FY25E, our concern about muted return ratios and limited FCF yield remains. Reiterate ADD.
Prabhudas Lilladher
We believe RIL provides a good investment opportunity given 1) its transition towards new age technologies and 2) cash flow for growth serviced from the traditional refining and petrochemical segment. The company is trading at 12.8x FY24 consolidated EV/EBITDA and 22.7x FY24 consolidated PE. We estimate consolidated EPS CAGR of 10.7% for FY23-FY25E and value Refining and petrochemical segment at 7.5x FY25 EV/EBITDA, Digital services at 15x FY25 EV/EBITDA and Retail at 37x FY25 EV/EBITDA. Maintain ‘Buy’ at SOTP-based TP of Rs 2898.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
