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The brokerage has retained buy rating on RIL but revised target price down by 2 per cent to Rs 1,550, partly to reflect the potential delay in Jio tariff hike due to the ongoing crisis on account of the Covid-19 outbreak.
Shares of RIL ended down 3.3 per cent at Rs 1,150.05 on Wednesday. Year-todate, the stock is down 24 per cent while the Sensex has fallen 26 per cent so far.
According to Goldman, debt has been declining and is likely to continue to come down in the ongoing financial year as well.
Share of the fast-growing consumer businesses of Reliance will also reach about 50 per cent over the next financial year due to the company’s ability to gain market share from highly-leveraged peers — both in the telecom and retail segments. Goldman does not see Reliance’s telecom business being affected by the coronavirus outbreak, as the business can see rise in data consumption with majority of the population remaining at home due to social distancing measures. Its retail operations are likely to get impacted because of the lockdown but it is likely to see a rapid recovery in earnings once the lockdown is lifted.
“We expect a rapid recovery for RIL’s earnings driven by 60 per cent Ebitda (earnings before interest taxes depreciation and amortisation) growth for the telecom business in FY21 on account of higher ARPU (average revenue per user), recovery in oil prices and refining margins as supply demand trends improve in 2HFY21 (October-March), and turnaround in the retail business once lockdown restrictions are lifted,” said Goldman Sachs.
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