RIL share price has plunged over 8 per cent in the last one month, but it has rallied over 15% in the last one year. Despite the recent correction, brokerages are bullish on the stock.
Reliance Industries Ltd (RIL) shares price gained nearly 1 per cent on Tuesday after several brokerage firms said that RIL’s plan to repurpose its Rs 30,000 crore gasification assets for clean energy will offer the company an opportunity to rope in more investors. On BSE, RIL share price rose to touch intraday high of Rs 2358.55 per share. The stock has plunged over 8 per cent in the last one month, but it has rallied over 15% in the last one year. Despite the recent correction, brokerages are bullish on RIL stock.
Morgan Stanley and Motilal Oswal see up to 20% upside on RIL stock after the Mukesh Ambani-led conglomerate announced that it is targeting to become one of the largest producers of blue hydrogen globally, producing zero-emission fuel at costs that will be half of the global average.
Stock Talk: Should you buy Reliance Industries shares? Check target prices
Morgan Stanley: OVERWEIGHT
Target price: Rs 2,926
Morgan Stanley maintained an ‘overweight’ rating on RIL stock with a target price of Rs 2,926, an upside of around 25 per cent from the current market price. RIL had a strong operating quarter and should improve going forward given the trajectory of crude and gas prices, according to the international brokerage. “The RIL stock offers the most attractive risk-reward in the India energy space,” it said. Gases will drive NAV and multiple expansion for Reliance Industries under its plan to monetize and expand energy infrastructure. “The ‘life of asset’ debate should also reverse and boost multiples as investors appreciate the long term margin increase that RIL can sustain by asset repurposing,” it further said.
Motilal Oswal: BUY
Target price: Rs 2,800
Analysts at Motilal Oswal Financial Services value RIL’s standalone segment at 7.5x, telecom at 17x FY24E, and retail at 31x FY24E EV/EBITDA. With a target price of Rs 2,800, the domestic brokerage firm has reiterated BUY rating on the stock. “While it is difficult to value the recent foray into renewables as well as the future foray into chemicals, the current valuation multiple of the standalone business may see an upward revision going forward,” it said. According to analysts at MOFSL, RIL’s foray into chemicals would complement the earlier commenced initiatives of the four renewable Giga plants. Key risks the Buy call could be technology risks associated with the new age renewables, high capex as well as similar large-scale announcements by other global players.
JP Morgan: Neutral
Target Price: Rs 2,575
JP Morgan maintained Neutral rating on the stock with a Dec-22 target price of Rs 2,575. “We value O2C at an EV of $65bn, and value Retail at $98 billion with a Jio Mart value of $23 billion. We also assign a 2x investment value for the proposed green energy/renewable investment. We believe higher oil prices, expectations of a refining margin recovery, and ramp-up of Jio Mart should continue to support the stock”, it said. The impact of large spending on new digital initiatives, continued weak refining margins, and delays in reopening of the Retail business are the downside risks to the target price, while key upside risks include a sharper-than-expected recovery in the core business and new telecom tariff hikes.
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