Will Reliance live up to the Hype?

Shares of Indias largest private enterprise Reliance

Industries, often termed as the sleeping giant, hit over a
seven-year high on the back of higher volumes intraday on
Monday. The stock rose as much as 2.42 per cent to touch
a fresh 52-week high of Rs. 1,129, extending its recent
streak of outperformance.
The scrip has been
outperforming the Sensex and Nifty from the time the
company launched telecom services under Reliance Jio.
Since September 5, its shares have increased 11 per cent
compared with Nifty which has remained flat during the period. The launch of
Reliance Jio has driven analysts turning bullish on the stock.
As of 10.00 AM, shares of Reliance Industries traded 1.29 per cent higher at Rs.
1,121.50.
Analyst expects Reliance to be free-cash-flow (FCF) positive company in FY18 and
further more Reliance Industries is now set for a recovery and the stock is trading at
attractive valuations. On 1st September, Reliance chairman Mukesh Ambani declared
the acquisition of 100 million customers for Reliance Jio as the companys target and
aspires to bring 2 lakh villages and 18,000 cities or towns under its umbrella by
March 2017. With its commercial launch on 5th September, Reliance Jio has
expanded a free welcome offer on its apps till 31 December. The tariff plans varies
from Rs.149 to Rs.4,999 per month, with as much as 75GB data included in the top
plan.
Most analysts were skeptical on the stock for the past few years, considering its huge
investment in the telecom venture, Reliance Jio, which constitutes a quarter of its
balance sheet now. Reliance Jio's earnings profile seemed critical for its outlook. As
per the disclosed data tariffs, the average revenue per unit (ARPU) for Reliance Jio
could be approximately Rs. 400. Reliance Jio would need a subscriber base of around

40 million to break even at the EBITDA level, and around 30 million more subscribers
to break even at the profit before tax level. Analysts have seen significant benefits
from
RIL's
investments
in
cyclical
businesses.
With the non-telecom business waving signs of a turnaround and positive response
for its telecom venture, the scrip could lift off from its current levels. Reliance's $21
billion investment in Jio for the last six years has faltered the stock performance. But
owing to a 30 per cent CAGR in core earnings (ex-Jio) and $20 billion in estimated
cash flow over FY 2017-FY19, there is more upside in the stock.
In another news, On 22nd September, industrialist Mukesh Ambani was named Indias
richest person for a ninth year in a row with a steep increase in net worth to $22.7
billion, whereas Sun Pharmas Dilip Shanghvi was ranked a distant second with a
wealth
amounting
to
$16.9
billion.
Reliance is among the top 500 performing stocks for this quarter, out of the 1700
stocks listed on NSE, as analyzed by Dynamic Levels analysts. The closest support
and resistance level of Reliance share price is seen at Rs. 1089 and Rs. 1149,
respectively.

Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the
research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making
investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

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Article Written by
Madhurima Chowdhury