Reliance Industries: Too Much Hype About R-Jio ?

For RIL, 1020-1040 may be a strong supply zone for the time being--

Pan India commercial success will be tough for RJ, 

as its a new ecosystem & switch over may not be smooth in the near term

CMP: 1004

Either sell below 1005-992 or on rise around 1020-1040;

TGT: 970-940*-910 (1-3M)

TSL>1055

Note: Consecutive closing above 1055 for any reason, RIL may further rally up to 1075*-1100 & 1145-1200 in the mid to long term.

RIL rallied almost 25% from its late Aug'15 low of around 817 on the back of its excellent results and potential of its telecom operations (R-Jio).

RIL is very ambitious and optimistic about its RJ operations and success. RJ is basically looking to revolutionize the "Digital India" concept and customer usage pattern. It aims to bring India's 1.2 bln people under "Digital Umbrella".

For this, RIL so far invested around $15 bln in the RJ, but some analysts are wary of the company's ability to generate positive returns in the next few years amid very low ARPU in India. Also there is no clarity on the business model and subscriber addition strategies for RJ till now. All will depend upon fast transition of customers to this new LTE ecosystem and 4G handsets, product pricing, user experiences etc.

For the next few years, RJ may cause negative SOTP valuation for RIL by around 300/- par share as par some calculations. 

Looking ahead, all eyes will be on Q3FY16 result of RIL to have glimpse of combination of RJ effect and possible lower GRM as spread between Crude & Brent Crude is narrowed considerably in Q3.

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