17 October 2011

Thunuguntla's view on Reliance Industries


Jagannadham Thunuguntla of SMC Global Securities share his view on Reliance Industries .
Thunuguntla told CNBC-TV18, "Reliance Industries, yesterday’s results clearly reflect that out of the three segments one is the gross refining margins are surely under pressure. They are not up to the mark as market had expected. Even on the petchem side definitely the margins have got squeezed by about 3% point year in year. Whatever the problem that the company is having on the refining and petchem is getting compensated with the other income because other income is the company is getting about Rs 1100 crore per quarter thanks to the Rs 61,000 crore cash balance that company is having on the books. So treasury income is definitely compensating the slowdown on other front."
He further added, "Having said that the real kicker for the stock will come either because of these two reasons - either if the KG D6 technical problem will get resolved thanks to the BP joint venture or if the company uses this Rs 61,000 crore maybe for some big global acquisition and that acquisition adding some value to the company. But for either of this to happen it seems that at least almost 18 months wait is there, so until and unless that happens, I think it’s very difficult for the stock to get back into the four digits."
"I think the company is a very good bet for Rs 700-900 that kind of swing trade - buy at Rs 700, sell at Rs 900 and again short at Rs 900 for Rs 700. I think it is one of the swing trading candidates as of now. But the stock could get back to four digits, I think of these two things have to happen - either gas or acquisition."

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