What should investors do with Reliance Industries after Q3 result: buy, sell or hold?


Consolidated revenue from operations for the quarter increased 6.7 percent quarter-on-quarter to Rs 1,23,997 crore, rising sharply from Rs 1,16,195 crore in the September quarter 2020.

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Reliance Industries share price slipped in the early trade on January 25 after the company announced its December quarter result.

The country’s largest company by market capitalisation on January 22 reported a 40.5 percent sequential growth in consolidated profit at Rs 14,894 crore for the quarter ended December 31, 2020, driven by a robust revival in O2C and retail segments and a steady growth in digital-services business, with Jio showing a 15.5 percent QoQ growth in profit and 4.1 percent rise in ARPU.

The oil-to-telecom conglomerate’s profit in the previous quarter stood at Rs 10,602 crore.

The company’s consolidated revenue from operations for the quarter increased 6.7 percent quarter-on-quarter to Rs 1,23,997 crore, rising sharply from Rs 1,16,195 crore in the September quarter, with a strong sequential rebound across all businesses.

Also read:  RIL Q3: Profit up 40% on robust revival in O2C, retail segments; Jio ARPU grows to Rs 151

Here is what brokerages have to say on the stock and the company after the December quarter numbers:

Prabhudas Lilladher

We leave our FY22/23E estimates unchanged but increase FY21 estimates by 34 percent to factor in deferred tax credit for the restructuring of the O2C business and other changes in depreciation and finance charges. Recovering economic activity augurs well for RIL’s all business segments and downstream focus will create value going ahead.

With its stated intention to monetise and forge global partnerships across businesses, RIL is well-positioned to incubate new businesses and pursue inorganic opportunities given its liquid BS. We believe positive news flow on global partnerships or stake sale is likely to keep valuations at an elevated level. Maintain a “buy” with a price target of 2,232 (unchanged).

Also read:

Also read: Reliance Jio Q3 results: Profit grows to Rs 3,489 crore; ARPU rises to Rs 151

Motilal Oswal

RIL believes demand for PVC, PP and polyester is expected to remain firm on account of improving end-markets.

We believe the spike in the petchem margins is led by pent-up demand post-COVID. Moreover, huge capacity additions in China would further lead to pressure on petchem margins in the coming months.

RIL recently commissioned gas production from its R-series cluster. KG basin is expected to achieve peak production of ~30mmscmd over the next two years (v/s current production of ~ 4.5mmscmd.

Using SOTP, we value the refining and petrochemical segment at 7.5x FY23E EV/EBITDA to arrive at a valuation of Rs 780 a share for standalone. We ascribe an equity valuation of Rs 900 a share to RJio and Rs 645 a share to Reliance Retail. Reiterate “buy”, with a target price of Rs 2,325 a share.


We lower our FY2021 earnings estimate to factor weaker-than-expected standalone performance partially offset by a fall in interest costs. We have fine-tuned our FY2022-FY2023 earnings estimates. We expect RIL’s earnings momentum to improve from hereon, as downstream margin would recovery with the expectation of higher oil and petrochemical demand in CY2021.

Moreover, the recent start of gas production from the KG D-6 field (expected peak production of 30 mmscmd) is positive in terms of revival of the upstream business. Additionally, recent SEBI approval for the acquisition of Future Group’s retail business by Reliance Retail would fasten the deal process and ultimately help RIL to further consolidate its position in the organised retail space in the country.

Further value unlocking in the digital and retail businesses (with a likely IPO for the consumer business in the next few years) would add to shareholder’s return in coming years. Hence, we maintain our buy rating on RIL, with an unchanged SoTP-based price target of Rs 2,400. At CMP, the stock is trading at 19x its FY2023E EPS and 8.8x FY2023E EV/EBITDA.

Elara Capital

Elara Capital reiterates “accumulate” with the target price at Rs 2,357 on FY23E EV/EBITDA for retail at 19.5x (unchanged) and Jio at 17x (unchanged), in line with the deals with Facebook, Silver Lake, etc. Our SOTP-based TP assumes 7.0x (unchanged) FY23E EV/EBITDA for petchem & refining.

Credit Suisse

The research house has kept a neutral rating on the stock, with a target at Rs 1,930 per share. It was a weak quarter across retail, O2C & Jio. There was a good ramp-up in JioMart and the fashion segment.

Credit Suisse cut FY22/FY23 EPS estimates by 4 percent/3 percent due to slow recovery in refining margin and also cut estimates due to slow pace of net subscriber additions in Jio, reported CNBC-TV18.

Goldman Sachs

Goldman Sachs has maintained ” buy” call on the stock, with a target at Rs 2,390 a share. The Q3 was in-line; O2C carve-out underway as consumer businesses continue to grow.

The research firm expects  the core EBITDA growth of 59 percent YoY in FY22., reported CNBC-TV18.

At 0918 hours, Reliance Industries was quoting at Rs 1,991.90, down Rs 57.70, or 2.82 percent on the BSE.


The share touched its 52-week high of Rs 2,368.80 on September 16, 2020 and a 52-week low of Rs 867.45 on March 23, 2020. It is trading 15.91 percent below its 52-week high and 129.63 percent above its 52-week low.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.