On Wednesday, the reliance share rose 1.4 percent to its intraday high of Rs 2,595 per share from its previous close of Rs 2,558.10 per share after Switzerland-based brokerage UBS raised its buy target.
According to a report that aired on CNBC TV18 on December 19, 2023, the Switzerland-based brokerage UBS increased its buy target price in Reliance Industries Ltd to Rs 3000 per share, which is 15 percent higher than the current market price of Rs 2,595 per share.
UBS, a brokerage, believes that leverage concerns are exaggerated and that the consumer businesses of the Mukesh Ambani-led conglomerate are the main focus. Also, the portion of segment EBITDA that the consumer business segment contributes could increase from 49 percent in FY23 to 58 percent in FY26.
More specifically, compared to 40 percent over FY21-23, the consumer business segment could account for about 85 percent of the incremental EBITDA over FY23-26.
Still, the brokerage pointed out that investors have not fully recognized the company’s earnings growth driven by its consumer businesses. According to this perspective, increasing earnings might produce enough free cash flow after FY24 to start paying down debt.
According to UBS, Reliance’s digital and retail businesses will see a decrease in capex intensity. It further stated that the costs associated with new energy opportunities are still being determined.
Looking at the Reliance Industries Ltd financials, the net revenue increased by 1.1 percent year over year, from Rs 2,32,217 crore in Q2FY23 to Rs 2,34,956 crore in Q2FY24. In addition, the company’s net loss rose by 27 percent year over year, from Rs 15,587 crores in Q2FY23 to Rs 19,820 crores in Q2FY24.
The company’s promoter owns half of the shares, followed by the general public with 11 percent, foreign institutional investors with 22 percent, and domestic institutional investors with 16 percent of the shares.
Reliance Industries Limited is a large-cap stock with a market capitalization of Rs 17,29,917 crores. The share price rose 9.8 percent last month.
Additionally, the company has a low debt-to-equity ratio of 0.44, with a return on equity of 9.8 percent, a return on capital employed of 11 percent, and a net profit margin of 7.5 percent.
Reliance Industries Limited is a Mumbai-based Indian multinational conglomerate. Energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles are among its industries.
Written by Sriram KV
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