Mukesh Ambani-led Reliance Industries’ shares have lost 14% in over two months. They were at ₹ 2723 levels at the beginning of December and were trading at ₹ 2331.95 apiece at 11:31 AM on Friday.
Abhijeet Bora, DVP Research Analyst at Sharekhan by BNP Paribas said that a decline in the share price of Reliance industries is primarily due to volatile O2C segment margins, the negative impact of a windfall tax, absence of telecom tariff hike and investment in 5G and general market volatility, given global interest rate hikes.
They believe that firm middle distillate cracks, recovery in polymer margins led by China’s reopening and likely removal of SAED on diesel/ATF would support recovery in standalone earnings.
Bora added that Jio’s earnings momentum is to remain strong as they expect improvement in ARPU led by further telecom tariff hikes/5G rollout while store addition/market share gain in organized retail bodes well for growth in the retail segment.
Sharekhan
Sharekhan has a buy call on the shares of Reliance Industries, with an SOTP-based target price of ₹ 3050.00. This translates to an upside of 30.79% as compared to its share price of ₹ 2331.95.
ICICI Securities
After the company’s results were released, ICICI Securities in its research report said that RIL’s consumer business will be the growth driver, going ahead. Tariff hikes undertaken by Jio would be a key monitorable. It maintained a buy rating on the stock with a target price of ₹ 3050, indicating an upside of 30.79%.
Jefferies
Jefferies has a buy call on the shares of Reliance Industries with a price target of ₹ 3,100. This translates to an upside of 32.93% as compared to its share price of ₹ 2331.95.
Reliance Industries is one of India’s largest conglomerates with a presence in oil refining & marketing and petrochemicals, oil & gas exploration, retail, digital services, media, etc, making it a well-diversified business entity.
It is a large-cap blue-chip stock with a market capitalization of ₹ 15,50,401 crores. The company has a return on equity of 8.21% and an ideal debt-to-equity ratio of 0.40. Its shares were trading at a price-to-earnings ratio of 25.08, which is significantly higher than the industry P/E of 5.51, indicating that the stock might be overvalued as compared to its peers. It could also mean that investors are willing to pay a higher price for the company’s future earnings.
Written by Simran Bafna
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