MOSL: RELIANCE INDUSTRIES (Buy)-How the growth levers are stacked
RELIANCE INDUSTRIES: How the growth levers are stacked
(RIL IN, Mkt Cap USD219.4b, CMP INR2500, TP INR2900, 16% Upside, Buy)
- RJio, the telecom vertical of Reliance Industries, is in a sweet spot as peers Bharti and VIL have taken a 20% tariff hike. We expect RJio to follow suit, garnering a 23%/7% upside on RJio / consol EBITDA. Further, improving traction in JioPhone Next should be an aiding factor.
- The Retail segment is seeing strong revival across categories during the festive season, accelerated store adds, and healthy scale in the Digital business - these factors should drive sharp growth from 3QFY22.
- GRMs are weakening amid a worsening COVID situation in Europe. However, the Petrochem segment should offset the impact on the back of good demand and continued delays in upcoming capacities.
- RIL is trading at EV/EBITDA and P/E of 12x and 19x, respectively, on an FY23E basis. The strong earning levers in the Consumer business should support the stock. Using SOTP, we value the stock at INR2,900 and reiterate Buy.
Reliance Industries is primarily engaged in the production and market of petrochemical products, and refinery and retail of petroleum and LPG. Co.'s petrochemical products include polymer - polypropylene (PP), polyethylene (PE), poly vinyl chloride (PVC); polyester - polyester filament yarn (PFY), polyester staple fiber (PSF), polyethylene terephthalate (PET); polyester intermediates - paraxylene (PX), purified terephthalic acid (PTA), mono-ethylene glycol (MEG); and cracker products - ethylene, propylene and aromatics. Co. is also engaged in the manufacture of RELAB and textiles. Co.'s textile products are sold under the brand names: Only Vimal, Harmony, Reance, RueRel and V2.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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