K. ARAVIND
Reliance Industries, India’s largest private sector company, operates in petrochemicals, petroleum refining, textiles, retail and telecom.
Reliance Industries earnings are likely to rise significantly as the capital expenditure of the major business petrochemicals and refining is almost complete. Earnings growth potential paves the way for further rise in stock prices.
Shares are performing well as the company begins to reap the benefits of capital expenditure over the past six to seven years. In the few years before 2017, the cost of development projects increased due to the limited profit made by Reliance to its shareholders. However, with the proceeds from these projects, the company’s balance sheet performance improved and this was reflected in performance.
The growth of the telecom business will also support the company’s progress. Reliance Jio, which has become a new wave in the telecom sector and has ushered in new trends, has the potential to boost revenue. There has been a significant increase in the number of Geo customers.
During the April-June quarter of the current financial year, Reliance Industries performed well. The company had posted a net profit of Rs.13,233 crore for the quarter. Profit growth was 31 per cent over the same period last year. The company has total revenue of Rs 95,625 crore. 1.61 lakh crore in the first quarter of last year. Gross refining margin (GRM) is $6.3 per barrel.
Telecom subsidiary Reliance Jio has posted a net profit of Rs.2,520 crore. Profit growth of 182 per cent. Reliance Retail, another subsidiary, had sales of Rs.31,633 crore. Reliance Retail is undergoing rapid expansion.
Shares of Reliance Industries are expected to rise to Rs.2,530 in the current financial year. The stock is currently trading at Rs.2,070.
