Consolidated adjusted profit before tax, however, was up 28 per cent quarter on quarter (down 30 per cent YoY), 10 per cent below the brokerage's estimate as the decline/increase in interest cost/other income after the recent stake sale were below estimates due to the timings of cash receipts after recent stake sales, it said.
Further, other key downside risks include deterioration in refining margins; continued weakness in petrochemical margins; sharper rupee appreciation vs the USD; lower-than- expected R-Jio profitability, and; slowdown in Reliance Retail's growth, the brokerage firm said.
Those at IDBI Capital expect gross refining margin (GRM) and petchem margin to take another 2-3 quarters before inventory depletes. However, margin for retail and Jio may continuously rise on the back of higher store addition, increased contribution from online businesses, higher ARPU (average revenue per user) on tariff hikes and 5G implementations, it said.
"In our view, primary stock triggers—deleveraging, asset monetisation, digital momentum—have played out. Our 2-stage reverse-DCF shows the market is baking in high EPS growth, particularly for Jio (35 per cent p.a. for 10 years). Besides, deleveraging to net cash has counterintuitively lifted RIL’s WACC to its high CoE. We reiterate 'HOLD/SN' with taregt price of Rs 2,105 as recent excessive investor exuberance wanes," noted Edelweiss Securities in a November 1 report.