Sharekhan has downgraded its rating on Reliance Industries to hold with a price target of Rs 1,816 in its April 15, 2009 research report.
“With the commencement of gas production from the Krishna Godavari (KG) D-6 block, Reliance Industries Ltd (RIL) will now start monetising its investment in the exploration business. In spite of further capital expenditure (development of the KG D-6 block) over the next few years, the upstream business would generate significant free cashflows in the coming years.”
“We are rolling over the price target to the average of the FY2010 and FY2011 earnings. Consequently, we are revising upwards our price target for RIL to Rs 1,816 per share. In the last three months, the price of RIL stock has increased by 50%, outperforming the BSE-30 Sensitive Index, which has moved up by 21% during the same period. We are downgrading the stock to Hold rating. As the market price is close to our price target we recommend partial booking of profits (and waiting for a better entry point). Moreover, the recent weakness in refining margins and the stronger than expected rupee are the key risks to our earnings estimates and valuations,” says Sharekhan’s research report.
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