Dalal Street Investments

CLSA concerned about Reliance Valuations

December 2, 2006

Popular stock broking and research firm, CLSA has voiced concerns on the valuation of Reliance Industries Limited stock. In a report it said,

  • Capacity additions exceeded demand growth in 2006. This will become pronounced from 2008 as larger expansions start coming onstream
  • RIL is trading as a finely-priced, newsflow-driven asset play, but lacklustre core earnings growth over the next few quarters may weigh on its stock
  • Kotak Securities downgraded RIL and said, We estimate the gap between RIL’s stock price and our estimated fair value of its extant businesses at Rs 700 per share and Rs 600
  • RIL’s fundamentals have weakened over the past few months and there are several unresolved issues with Reliance’s financing, accounting and disclosures.

Its time to SELL and reduce some RIL holdings.

Via [ET]

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