Reliance Industries Ltd (RIL) has spent Rs1trn (trillion) capital expenditure (capex) year-to-date, majority of which is on Jio, followed by retail and E&P (exploration & production), as a result of which the reported net debt is Rs1.1trn as of Q3FY22-23, up 18% quarter-on-quarter (q-o-q), IIFL Securities said in a report.
The capex on 5G rollout, retail, and E&P should remain firm in FY23-24, it said.
"We cut FY23/24 consolidated EPS by 3%-4% to reflect 3%-8% Ebitda cut in JIO (deferment in tariff hike), higher depreciation etc; the 15% pa PAT growth builds in backended ramp up in E&P volumes and gradual pick up in revenue/sq ft in retail with unchanged margins. SoTP works out at Rs2,861/share; the stock will react positively to news flow on tariff hikes in telecom, demerger of Jio Financial Services, and green energy business," the report said.
Emkay Global Financial Services said, in a note on O2C, it saw plant turnaround in October '22. Domestic petchem demand was steady. Petchem deltas would improve from China's revival, while diesel-kero cracks should remain firm from lower inventories, Russian cap, and more than 1mbpd (million barrels per day) refining capacity addition in calendar year (CY) 2023 vs 1.9mbpd estimated oil demand growth globally. MJ1 gas output would start in Q4FY23.
Retail's revenue momentum would continue with operating leverage expected to drive margins, while Jio is expanding its 5G coverage (pan-India by Dec-23) with fiber also scaling up. RIL's capex is led by Jio and retail. While net debt has increased, it is still less than the annual Ebitda runrate.
Motilal Oswal Financial Services said in a note that Reliance Industries (RIL)'s 3QFY22-23 consolidated revenue was in line with its estimate, up 17% y-o-y/down 6% q-o-q. Ebitda grew 19% y-o-y/13% q-o-q (18% beat) driven by a big beat in stand-alone result. Adjusted for an extraordinary gain in Q3FY21-22, profit after tax (PAT) declined 3% y-o-y as the improvement in operating margin was offset by higher depreciation and finance cost.
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