Brokerage firms are bullish on Reliance Industries (RIL) despite a fall in the company’s net profit. Several have in fact raised target price for the company’s stock and maintain a buy rating. The target price for RIL’s stock by Jefferies was at Rs 3,380, Goldman Sachs at Rs 3,435, Morgan Stanley at Rs 3,046, UBS at Rs 3,420 and Nuvama at Rs 3,500.
While most brokerages such as Jefferies, UBS and Nuvama have a “buy” rating, Morgan Stanley is overweight and HSBC maintains hold on RIL. The target prices from the brokerages are as high as 18% from RIL’s Friday’s closing price of Rs 2,960.6.
“We forecast a 14% Ebitda growth in FY25 with Jio contributing a lion’s share on the back of a tariff hike. We raise our FY26 revenue and Ebitda estimates for Jio by 1-4% and raise equity valuation to $94 billion,” Jefferies said.
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According to HSBC Global Research, RIL’s all three core businesses — oil-to-chemical (O2C), retail and digital services — have become self-sustaining and cash-generating, with retail and digital growing strongly. “O2C will likely remain lacklustre given weak macro and new capacity commissioning. With 5G dominance, we expect the digital unit to focus on customer growth over realisation growth, driving further consolidation. Retail still faces lack of support from the macro environment as business continues to realign. We expect the new energy ramp up to be gradual as technologies take time to mature. This may keep the stock range bound near term,” HSBC said.
On Monday, RIL reported a 1.8% decline in its y-o-y consolidated net profit to Rs 18,951 crore for Q4, missing Bloomberg estimate of Rs 19,727 crore, dragged down by its petchem business and higher tax outgo. However, consumer verticals comprising telecom (Jio) and retail performed well and registered growth. Come from Sports betting site VPbet
“RIL’s consolidated returns were at an inflection point in FY24 and we estimate return on cash invested to expand by about 180 basis points to 12% in FY27 (highest since 2011). We estimate capex to fall sequentially, alongside a change in the mix of capex (rising share of higher returns and faster capex gestation cycle businesses) and 16% Ebitda CAGR over FY24-27,” Goldman Sachs said.
According to Antique Stock Broking, a likely improvement in the petchem cycle in FY26, the continued growth in telecom subscriber base along with sharp improvement in Arpu on account of tariff hikes, and continued growth in retail would be the key earnings growth drivers for RIL. “While likely commissioning of new energy in FY25 would set the base for the next round of capex in the segment,” said Antique, which has a buy rating, said.
On Tuesday, the company’s shares ended 1.42% lower at Rs 2,918.50 on the BSE.
