Jigar Shah of KR Choksey Securities says that Reliance Industries' results are by and large as per expectations, except the fact that the other income has gone down and there is an increase in both depreciation and tax.
Also, he gives an annual earnings estimate of Rs 77 for Reliance Industries for the year and a price target of Rs 1250-Rs 1300 for the year-end.
Excerpts from CNBC - TV18's exclusive interview with Jigar Shah:
Your initial impression of Reliance Industries numbers?
My impression is that the numbers are by and large as per expectations, except the fact that the other income has gone down and there is an increase in both depreciation and tax. Also we must probably see that this result is after giving away some kind of discounts to PSU oil companies also.
That is something, the exact figure for which I am not sure, that would have impacted the results as we can see from the Mangalore Refinery and Petrochemicals results, which was declared a few days back. Overall I would say that the result is good and I have no change in my annual earnings estimate of Rs 77 for Reliance Industries for the year and a price target of Rs 1250-Rs 1300 for the year-end.
The big figure that we were waiting for which is $12.5 per barrel on GRM, gross refining margins, basis, does that surprise you or were you expecting it to be that high?
Given the kind of rise that we have seen in crude prices off late, this was something, which was expected because refining margins have a tendency to go up with that, and that is not surprising. Going forward, it should give them slightly better margins even from here and should further improve the performance.
A word on how the retail business shapes up now because they have said that they actually went in for a price increase in the retail space and yet under recoveries are quite high and they are facing some pressures there?
I think the results,, which would follow of public sector companies, I expect them to clearly reflect that petroleum retailers are under pressure and I think Reliance also reduced its sales quite drastically during the month of June for the domestic retailing business. That would have also affected their profitability in someway.
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