CLSA thinks 2016 will be game changer for Reliance
Multinational brokerage CLSA thinks 2016 will
be game changer for Mukesh Ambani-controlled oil-to-telecom giant Reliance Industries. The company is set to commission nearly $30-billion of projects this year alone, setting the stage for faster earnings growth and a possible rise in return on equity.RIL is investing $55 billion till 2018, a sum equal to its current market cap, to expand capacity in petrochemicals, refining and establish the telecom business. Of this, about $30 billion worth of projects will be commissioned in 2016, the largest in the company's history. This is expected to boost revenue and earnings and revive return on equity (RoCE and RoE). RIL's petcoke gasification project, one of the largest in the world and refinery off-gas cracker (ROGC) project are aimed at cutting costs.When commissioned the firm will replace the high cost imported LNG with cheaper petcoke gas adding $2 per barrel to its gross refining margins (GRM). CLSA thinks an addition of 100 million telecom subscribers in the first year of operations — an ambitious target — could add another $25 billion to the market cap of RIL. Buy this stock for next one to two years horizen.
be game changer for Mukesh Ambani-controlled oil-to-telecom giant Reliance Industries. The company is set to commission nearly $30-billion of projects this year alone, setting the stage for faster earnings growth and a possible rise in return on equity.RIL is investing $55 billion till 2018, a sum equal to its current market cap, to expand capacity in petrochemicals, refining and establish the telecom business. Of this, about $30 billion worth of projects will be commissioned in 2016, the largest in the company's history. This is expected to boost revenue and earnings and revive return on equity (RoCE and RoE). RIL's petcoke gasification project, one of the largest in the world and refinery off-gas cracker (ROGC) project are aimed at cutting costs.When commissioned the firm will replace the high cost imported LNG with cheaper petcoke gas adding $2 per barrel to its gross refining margins (GRM). CLSA thinks an addition of 100 million telecom subscribers in the first year of operations — an ambitious target — could add another $25 billion to the market cap of RIL. Buy this stock for next one to two years horizen.
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