RIL’s post-tax ROCE could rise by 11% in two years: Morgan Stanley

Reliance Industries’ after-tax return on capital employed is likely to rise to 11 per cent in two years from the current 7-8 per cent as margins rise on the back of an increase in telecom tariffs, Morgan Stanley said on Tuesday.

“RIL strong stock outperformance has once again led investors to ask about what is next,” it said in a research report.

Over the past decade, RIL’s post-tax ROCE (return on capital employed) has been range-bound around 7-8 per cent. “We think this trend is set to be reversed as the telecom tariff increase should raise returns on USD 50 billion of investments (50 per cent of the last capital expenditure cycle).”

Last week, top-three mobile operators Bharti Airtel, Jio and Vodafone Idea increased prepaid tariffs by 14-33 per cent.