The start of the week has been volatile for RIL shares, post Q4FY19 result announcement. The company earmarked single-digit growth in Q4FY19 profit by 9.7% to Rs 10,362 crore compared to Rs 9,438 crore in the corresponding period of the previous year. Among the major milestones touched by RIL in Q4FY19 was that its revenue from retail business crossed over Rs 100,000 crore. It recorded the highest annual EBIT for petrochemicals, retail and digital services. However, the uptick in RIL shares has been at slower pace. On Tuesday, RIL's stock was trading at Rs 1374.05 per piece up by Rs 10.75 or 0.79% on Sensex at around 1332 hours. However, one can grab this price correction opportunity in RIL currently, as CLSA has given a buy rating on the company with a target price of Rs 1,665 per piece.

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According to CLSA, Jio has demerged & deconsolidated its tower & fiber assets into two separate SEBI-approved infrastructure InvITs which reduced it consol.liabilities Rs1.07tn (US$15.5bn). Adjusted for this, 4QFY19 consol.Capex spiked to Rs327bn with telecom at Rs215bn. Consolidated net debt/net liabilities fell by US$5.7bn/US$9.4bn QoQ. 

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With Jio close to achieving 99% population coverage, CLSA says, "The company guided for Capex intensity in mobile business to come down notably. Reliance clarified that incremental Capex for tower & fiber will be done by the InvIT and willnot be on its books. The decline in Capex intensity and fall in consol. net debt/Ebitda to below 3x in 4Q should be seen as clear positives."

Nonetheless, CLSA adds, this demerger means Jio will need to make lease payments to use this asset, and building these into our numbers (at 10%) drives a 3%-8% cut in our FY20-21 EPS.

With the completion of the acquisition in Den and Hathway, broadband roll-out should pick-up, CLSA says, "we now add US$4.5bn in value (link) from this. With IMO pollution norms for fuel oil to kick-in from Jan 2020, we estimate a US$4/bbl GRM boost for 3-4 years & add this to our valuation at 3x Ev/Ebitda. These, and including the value of listed investments liftsour target from Rs1,500 to Rs1,665. Benefits from petcoke gasification, clarity on ecommerce plans, further asset monetisation and a pick-up in broadband are near-term trigger; reiterate BUY."