Looking at the Chart, RIL (CMP: 927) has to sustain over 945-965 zone for immediate target of around 1020. Consecutive closing above 1020, it may scale 1100-1150 area in the short term. In the mid to long term, only sustaining above 1150 zone, it could climb to 1280-1650 zone. (Possibly by FY:17-18)
On the down side, immediate support is around 913-908 followed by 887-864-840 zone. Sustaining below 840 area, it could again fall to 800 territory (low probability in the current market conditions).
QTR-4 result published yesterday is clearly above market expectations. Despite fall in revenue on account of planned shut down of plants and falling crude oil, RIL is able to beat net profit expectations on the back of superior refining margin & GRM (10.10). It appears that massive capex deployed in petrochem & refining complex & world class technology is yielding result and various analysts are also expecting a sequential higher GRM of around 12-14 in the coming quarters.
Going ahead, all eyes will be on the launch & subsequent actual shape of its telecom venture, R-JIO. Apart from this R-Retail formats are also shaping well and currently, it is the largest organised retail networks in our country. There will also be an immense opportunity for Reliance to unlock value of its Retail & Telecom arm by listing it as separate company in future (de-leverage).
But ongoing legal battles in various forums over different issues may cast a shadow over its performance (like O&G Exploration etc) from time to time, unless it is settled in full & final.
RIL is a clear under performer of our market (YOY), except the last few weeks on expectation of a good result. Going forward, RIL has to contribute greatly along with banking & metal sectors for our market to achieve & sustain record highs.
Though, it seems that RIL has already discounted expectation of a good result to a large extent, going by the stock movement over the last few weeks (from 800-940 zone), it has great potential to scale & sustain 1020 zone in the short term, but for that technically its has to provide at least 2-3 consecutive closing above 945-965 zone.
As par BG metrics of quick TF model, median valuation of RIL is around 1100 by considering its current TTM EPS of around 80. But, if we assume projected FWD EPS of around 100 (FY:17-18), its median value may be around 1250 under the current market scenario.
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| RELIANCE | 80.1 | 614.91 | 17.02 | 1115.81 | 1103.74 | 1109.77 | 913.24 | 893.59 |
| RELIANCE | 100 | 842 | 17.02 | 1246.73 | 1233.24 | 1239.99 | 913.24 | 893.59 |
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