Time & price action suggests that RIL (CMP: 1025) has to sustain over 1030 for an immediate target of 1045-1055-1070. Only consecutive closing above 1070, it may target 1100-1115 & 1132-1150 in the near term. In the long term, only sustaining above 1150, RIL may scale up to 1450-1650 (FY:17-18) under the bullish case scenario.
On the downside, immediate support is around 1015 zone and below that RIL may fall to 1002-990-983 immediately. Consecutive closing below 983, it could further fall to 964-948-939-920-910-894 zone in the near term. Sustaining below 894, RIL may be further crashed to 859-847 zone in the worst bear case scenario,
Bottom Line: Technical Trading Levels (Positional)
| SL</>5 | FROM SLR | |||||||||
| RIL | CMP | 1025 | ||||||||
| T1 | T2 | T3 | T4 | T5 | T6 | T7 | SLR | |||
| Strong > | 1030 | 1045 | 1055 | 1070* | 1100 | 1115 | 1132 | 1150 | <1015 | |
| Weak < | 1015 | 1002 | 990-983* | 964 | 948-939 | 920-910 | 894* | 859-847 | >568 | |
Q1 result published on Friday evening is largely in line/above market expectations. But going by the time & price action for the last few days for the scrip, technically, the result might be already discounted & some long positions could unwind in the short term. Although on Y-O-Y basis, quarterly profit grow by around 12%, on a Q-O-Q basis, EPS declined by around 3% (against around 22% growth in previous QTR).
In any way, the 12% Q1 growth is supported by its superb GRM of $10.4 (6 months high) against $8.7 & $9.3 a year and a quarter ago. Although the revenue fall sharply this QTR amid slump in energy/crude prices, it seems that RIL's massive investments in its petrochem business is showing result in terms of margin (integrated hydrocarbon chain) & high operating rates amid substantial increase in transportation fuel demand.
Looking forward, RIL is confident of maintaining sequential growth in EBITDA in its core operations (Petrochem and E&P) by leveraging the strength of its integrated value chain.
The company will formally launch R-JIO-4G most probably on 28-th Dec'2015 (birth day of Dhirubhai Ambani) and the beta testing of the same will start shortly.
Reliance retail is also showing healthy growth and is contributing in the bottom line of the company.
But the main theme of RIL is now playing around its telecom operations, which might be far ahead of the reality as far as the scrip is concerned. At Q1, RIL has consolidated debt of around Rs.1.35 lakh cr against cash & cash equivalents of around Rs.0.82 lakh cr, a significant portion of which (debt) belongs to R-JIO. RIL is planning to raise more debt to fund R-JIO apart from its internal accrual. RIL's deep pocket may also see some consolidation in telecom space, where only strong player could survive.
Clearly, the telecom operations will stretch the balance sheet of RIL in the near term, while we could see visible result from R-JIO only after FY:17-18. Again, India fast becoming the world's largest growing smart phone market with massive scope in data service & "Digital India" theme, R-JIO's 4G may be the game changer in the telecom space by next few years. But headwinds may come from single digit ROE of telecom space and 4G voice calling technology on LTE along with availability of smart, affordable & compatible 4G devices for the masses.
Shale gas business of the company is also facing various challenges and we may see more shale asset sale by RIL in the coming days, which will be positive for the scrip.
Overall, RIL may be within a broad range of 920-1150 in the near term, until more clarity & real result will come for R-JIO.
As par BG metrics, current median valuation of RIL might be around 1100 and its projected fair valuation may be around 1160-1260-1360 under the present market parameters (FY:16-18).
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| RELIANCE | 72.79 | 614.91 | 17.02 | 1072.87 | 1126.37 | 1099.62 | 929.1 | 1024.07 |
| RELIANCE | 81.03 | 842 | 17.02 | 1131.97 | 1188.41 | 1160.19 | 929.1 | 1024.07 |
| RELIANCE | 95.6 | 1135 | 17.02 | 1229.53 | 1290.84 | 1260.19 | 929.1 | 1024.07 |
| RELIANCE | 110.5 | 1532 | 17.02 | 1321.88 | 1387.80 | 1354.84 | 929.1 | 1024.07 |
No comments:
Post a Comment