RIL / RPL merger - my take ......
all of you must have heard on most business channels that about 65/70 % profits of the merged entity will now come from refining activity ...... if that is so - then why not discount the stock like any other refineries .....
and i am not talking of other indian refineries .... many of them are govt owned / old and may be inefficient .....
i am comparing with international competitors .... who all hv fairly advanced technology and most of them also have E&P arms as well as petrochemical production facilities ... so that is more like to like comparison ......
yes - i am talking of chevron / exxon mobil / BP / total / royal dutch shell etc etc .....
how many of you know that all these are getting P/E discounting of 5 to 8 maximum ...... so even if we are charitable and give merged RIL discounting at highest level of 8, then at the earnings level of 127/130 - indicated by some experts on channels ...... the share price can be atmost 1000 /1050 ......
and it takes care of all plus points like complexity and ability to process any dirty / cheap crudes etc etc ..... all that is reflected in earnings and we hv looked at P/E while arriving at this price ......
now what remains to be added is a political premium - if any - that you wud like to add ..... and even then the price can not go beyond 1100/ 1150 .....
CLSA has just downgraded ONGC and it is only to be expected that some firangi wl downgrade RELIANCE also .....
so act now when you are still likely to be the first ......
if ONGC and RELIANCE will take say 10 % knock from current levels ..... i think we r destined to see 2500 levels .... this month itself ........
JAY HOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO .......
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