Reliance Industries Ltd (RIL) on Friday reported its highest-ever quarterly consolidated net profit at Rs 11,640 crore for the third quarter ended December 31, up by 13.5 percent from the year-ago period. Harshvardhan Dole of IIFL gave his analysis Reliance Industries’ Q3FY20 numbers in an interview with CNBC-TV18.

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"The results were mixed bag while petrochemical was worse than what we had expected partly it was offset by refining and of course retail and Jio continue to surprise positively.

“Therefore, post results we have tweaked this year’s number by 4-4.5 percent and upped the next two years’ numbers by about 5-9 percent to reflect the performance of the core business and tariff hike that Jio has taken. So our sum of the parts stands revised to Rs 1,725 and RIL is our top pick in the sector,” he said.

He added that around 70-80 percent of Reliance Industries' earnings growth will come from retail and Jio by FY21-FY22.

On the Aramco deal, Dole said: “The management has never guided for a specific timeline of Aramco closure but our sense is the deal is in advance stages and I reckon that it should get completed in next 12 months, if not in next couple of quarters.

“Our numbers do not build in any upside either in form of debt reduction or possible synergies from this particular deal and as and when this deal happens, we look forward to tweak the numbers and change the sum of the parts."

On Jio, he said: “We have taken into account increase in average revenue per user (ARPU) for Jio and our current sum of the parts which factors in EV of $75 billion to Jio, builds in Rs 153 of ARPU in FY21.

“If the current consolidation continues, there is a good scope for the overall ARPUs to go up and the sensitivity of ARPU to sum of the parts is fairly high, for example Jio’s ARPU changes by Rs 10, the overall sum of the parts moves up by almost Rs 50 a share. So it’s quite sensitive to the underlying ARPU assumption,” added Dole.

Disclosure:

Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes CNBCTV18.com.