A ‘Blue-Chip’ stock is a stock of well-established, large, and financially sound companies that have operated for many years and have dependable earnings. Such companies are often observed to be paying dividends to their investors.
One such Blue-Chip company, Reliance Industries Limited, has marginally fallen today and trades at a price of Rs 2,354. The scrip is around 0.20 percent down as compared to the previous closing price of Rs 2,358. The company has a market capitalization of Rs 1,593,456 crores.
Last week, the company announced its annual results for FY22-23 with decent growth in the net profit figures. Details of the financials are mentioned later on in the report.
Reliance Industries Limited is engaged in hydrocarbon exploration and production, refining and marketing, financial services, retail, communications, etc. The principal operating and reporting segments of the group include Oil To Chemicals (O2C), Oil and Gas, Digital Services, Retail, and Financial Services.
The company, in its recent financial result for FY22-23, has witnessed opposing movements as far as the operating revenues and net profits are concerned. On one side, the operating revenues moved down from Rs 2,20,592 crores in Q3 to Rs 2,16,376 crores in Q4 and, on the other side, the net profits, during the same period, shifted up from Rs 17,806 crores to Rs 21,327 crores.
Having a yearly comparison of the above-mentioned metrics, the revenues saw decent growth from Rs 7,21,634 crores during FY21-22 to Rs 8,92,944 crores in FY22-23. Moreover, the net profits, too, increased from Rs 67,845 crores to Rs 74,088 crores.
In addition to the above, the basic margin ratios such as the operating and net profit margins improved in recent quarters. Operating margin moved up from 10.4 percent during Q3 to 11.3 percent in Q4. Net profit margins, in congruence with the pattern showed by the former, increased from 7.4 percent in Q3 to 8.9 percent during Q4.
Global brokerage Jefferies gave a ‘Buy’ tag to the company with a target price of Rs 3,100 indicating an upside of around 32 percent as compared to the current levels.
The rationale for providing the recommendation is the long-term fundamentals along with the removal of export duties, acceleration in the retail sector, demand recovery in the international markets, etc.
As per the latest shareholding data available, promoters hold a 50.41 percent stake, and FIIs hold a 22.49 stake in the company.
Written by Amit Madnani
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