Reliance Industries posted its highest ever quarterly net profits of Rs 19,299 crore, up 22 percent on a quarterly basis, for the quarter ended March 2023.
However, the positive Q4 earnings may not move a stock like Reliance, feels Dipan Mehta, Director at Elixir Equities.
"I think the numbers are very good and they are marginally better than what the street was expecting. But to move a stock like Reliance, you really need a very big trigger and 7-8 percent type of net profit growth, which is just broadly in line is not going to really move the needle that much. We are buying into three companies when you buy one share of Reliance. So in my opinion, the biggest trigger is the value unlocking opportunity, and how that is going to take place," Mehta said while speaking to CNBC-TV18.
According to market expert Prakash Diwan, the strong Q4 earnings will push the stock towards Rs 3,000-mark over the next 12 months.
Diwan said: "Reliance stock has been languishing more because of the fact that there are a lot of new businesses that are seeing investments happen. Even the 5G rollout has been fairly intensive in terms of capital allocation. So while retail and core refining O2C business may not be capital hungry, but these new businesses tend to kind of take the balance sheet into a little bit of a lopsided view where you may have to wait for things to start paying off. That is the reason everybody keeps on looking at that as optionality which at some point maybe in next 18-24 months start kicking and then there will be a very sharp surge in the valuations of the stocks. All put together, I think it makes it more attractive for a long-term investor to buy. However, we are in an environment where FIIs have been selling, ETFs have been exiting and that is why the stock remains under some sort of pressure. However, I think it is absolutely on its way to Rs 3000+ mark in the next 12 months given the Q4FY23 earnings."
Probal Sen, Energy Analyst at ICICI Securities, said, "If I look at the EBITDA number, you mentioned Rs 38,000 crore odd, which is broadly in line with what we were looking at. On the net profit line, there is a small beat, we were at about Rs 18,800 crore odd in our estimates, and the numbers have come in ahead of that. Primarily, it does look like the O2C segments, we were looking at about just shy of Rs 16,000 crore of EBIDTA, whereas the EBITDA that seems to be coming through is a bit ahead of that. So definitely a very strong performance from the O2C segment. Primarily our sense is it is led by a stronger GRMs and relatively lower impact of the windfall tax in this quarter."
"Another impact could be that the higher extent of Russian crude that has been coming into the system for all Indian players, that price benefit could also have helped the refining business to a certain extent. We obviously don't have the exact number in terms of how much percentage of crude was from Russia, and what price and if it played out but the numbers and the strength in those does seem to indicate that on the costs front that would play the role. So on the whole, I think, a fairly strong set of numbers."