Reliance Industries shares: ‘Firing on all cylinders’, brokerage sees strong upside
Reliance Industries (RIL) is in a sweet spot with the prospects of robust earnings growth across sectors over the next two years and being in a position to take advantage of a huge value creating opportunity in new energy business, as per brokerage and research firm Antique Stock Broking.
“Firing on all cylinders: While O2C will benefit from the “platinum age of refining”, telecom is set to ride the 5G transition with significant tariff increase tailwind, robust growth in retail from aggressive investments so far, and the gas production growth driving earnings of oil and gas segment. We initiate coverage on RIL shares with BUY rating and a SoTP target of ₹2,900 per share, an upside of 20%,” the note stated.
The brokerage’s EBITDA estimates are 11% higher than consensus for FY24 and 8% higher for FY25, driven primarily by O2C and it believes that the current phase of capex could be the last for this decade in O2C and telecom, delivering large cash flows in the second half.
“While robust earnings growth in O2C and telecom price revision are near term triggers, retail earnings catching up with aggressive investments and new energy investment, demonstrating scalability and return potential, will drive stock performance over the next two years,” it added.
“Reliance Industries is the largest retailer in terms of revenue and stores. It has bolstered its retail capabilities through acquisitions, partnerships, and strategic investments and has accelerated its investment in resources to build next-gen growth engines and supply chain capabilities. Reliance’s rising online/ offline distribution reach could drive its FMCG foray. With supply chain issues behind, electronics segment growth is set to catch-up,” Antique Broking highlighted.
Mukesh Ambani chairs and runs Reliance Industries (RIL), which has interests in petrochemicals, oil and gas, telecom and retail. Almost 60% of Reliance Ind’s revenue comes from oil-refining and petrochemicals, though, the conglomerate has been reducing its dependence on oil-refining by diversifying into retail, telecommunications and technology, and is also pivoting into new energy business.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.