With RIL Performance The PetroCom And Telecom Will Yield Better – ZMR Blog
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With RIL Performance The PetroCom And Telecom Will Yield Better

With RIL Performance The PetroCom And Telecom Will Yield Better

In terms of market value, the stock of Reliance Industries, the country’s largest company, can give more returns than the Sensex in the medium term. Profitability of the company’s telecom venture has been better than expected and its profits growth is increasing with the petrochemicals business. In the period of July–September 2017 quarter, the company made a capital expenditure of Rs 15,653 Crore, which was Rs 25,192 Crore in the April–June 2017 quarter. This indicates that the company’s massive capital expenditure period is ending.

In this case, market analysts may increase the company’s consolidated EPS estimates for the next three years and also increase the anticipated valuation of the telecom unit. Telecom unit Reliance Jio Infocomm’s impact on the consolidated profits of Reliance Industries was lower than the estimates of market analysts. Reliance Industries has invested more than Rs 2 Lakh Crore in this unit. Analysts may lose the fear of lower returns than telecom ventures after the September quarter results.

Reliance Jio had an operating profit of Rs 1,443 Crore in the September quarter, while analysts had estimated a loss of Rs 1,000–1,500 Crore in the quarter. Jio’s operating profit margin was 23.5% and the average revenue on the user was Rs 156.4. In the last financial year, Bharti Airtel’s operating profit margin was 33% and Idea Cellular had 28%.

Mukesh-Ambani

Analysts say that there may be an increase in the operating margin of Jio in the coming time. In this financial year, Reliance Jio Infocomm Ltd. was estimated to be below 20% margin. However, after the margin of 23.5% in the September quarter, they may increase its estimate. If this happens then the value of Reliance Industries’ telecom venture will increase. From the next financial year, Jio may start contributing to Reliance Industries’ consolidated profits.

On the other hand, Kotak Institutional Equities has estimated a decrease of 7 and 10 Rupees in Reliance EPS due to Jio. Jio’s Higher Operating Profit Margin means that the company will have more cash to repay the interest. Apart from this, the valuation of Jio will also be supported. The share price of Jio is 300 Rupees per share.

In addition, the performance of petrochemical division in Reliance’s core business was excellent. Margins in this segment have been offset by the poor performance of refining segments. The operating margin of the petrochemical division is 17.7%, which in itself is a record.

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