Reliance Industries’ ROCE may rise to 11 per cent in 2 years due to Jio tariff hike, says Morgan Stanley

As per Morgan Stanley, the after-tax return on capital employed (ROCE) for Reliance Industries Limited (RIL) is likely to rise to 11 per cent in two years resulting from the increase in tariffs by its telecom arm, Reliance Jio.

RIL’s ROCE was range-bound to around 7-8 per cent over the past decade. However, this trend is set to be reversed as the telecom tariff increase should raise returns on $50 billion of investments (50 per cent of the last capital expenditure cycle), Morgan Stanley said.

Reliance Jio has recently raised tariffs by up to 39 per cent following hikes by other service providers.