Buy Reliance Industries – Target 1040

Posted by admin

September 13, 2011

CMP: Rs 806
Target: Rs 1,040

We believe the broad regulatory charges on RIL, DGH and the ministry regarding violating the PSC would have no material impact on RIL as the regulators have also been criticized of being unequipped. We have trimmed our estimates for FY12 and FY13 due to lingering concerns on the global macro environment. In our opinion, the same is likely to reflect in RIL’s petrochem and refinery business. So, we have revised down our net profit by nine per cent for FY12 and by eight per cent for FY13. We have arrived at a revised target price of Rs 1,040 for RIL (by the sum of the parts [SoTP] valuation method), 13 per cent lower than the previous target price. We believe most of the negative aspects are already priced in the stock and retain our ‘Buy’ rating on the stock.

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