According to brokerage target pricing, Reliance Industries Ltd (RIL), the most valuable stock on domestic marketplaces, may yield significant profits in 2024. The Mukesh Ambani-led company reported strong September quarter earnings, and ICICIdirect expects the momentum to carry over into the December quarter, with higher premiums to Singapore GRMs and fair petchem spreads.
In addition to the robust performance of the O2C vertical, other verticals such as Jio, Upstream, retail, and digital are likely to boost consolidated profitability, according to the local brokerage.
"The stock has been out of the spotlight for more than two years, as it digested a strong rally in 2020-21." It is currently poised to complete this consolidation and is predicted to outperform the Nifty in 2024. Structurally, the corrective phase over the last two years has only retraced the preceding 18-month advance by 38% over the last 26 months, demonstrating a resilient price structure," the brokerage added.
Except for the Covid collapse, ICICIdirect stated the stock digested several headwinds, forming a sturdy foundation near the rising 100-week EMA (Rs 2,235) that has been held since 2017. It believes that the stock is headed towards Rs 3,050 in the longer run, based on the March 22-July 23 range (Rs 2,600-Rs 2,150=450 points) added to Rs 2,600.
Motilal Oswal Securities said in a research report earlier this month that it favours Reliance Industries since values have corrected 23% from its peak in September 2021. "RJio's Ebitda and PAT are expected to clock 15 per cent and 17 per cent CAGR, while Ebitda and profit of Reliance Retail are likely to report 30 per cent and 38 per cent CAGR, respectively, over FY23-25," the research stated. This firm predicts telecom pricing increases in H2FY25E, as well as an increase in subscriber market share. RIL has a target price of Rs 2,760.
UBS recently boosted its target price on the company to Rs 3,000, believing that investors had not to understand consumer-led earnings growth and that new energy potential had not been completely priced in. Morgan Stanley has set a price target of Rs 2,821 on the shares. It expects several triggers to break the roughly two-year earnings downgrade trend. The global brokerage added Reliance Industries to its list of companies to watch in its India Equity Strategy Outlook 2024.
It claims that RIL's management comments on "peak net debt" in FY24, paying all of its investments with operating cash flow (OCF), and a slowing in capex intensity in 2024 all hint to a greater emphasis on de-gearing the balance sheet.
"Other catalysts that could help the stock de-gear and catch up with peers on multiples include: potential hive off for retail warehouses and significant ramp-up in retail revenues, particularly in grocery; stock restocking for chemicals in India; tightening in global fuel markets, as China caps domestic refining capacity until 2025; and gas/oil production step up - all key to NAV expansion as net debt unwinds with higher OCF, despite our $17 billion annual investment for
According to Jefferies, RIL underperformed the Nifty and trades at a discount to its 5-year average forward Ebitda. In FY25E, it anticipates rate increases, quicker broadband subscriber growth, and decreased spending in Jio and Retail. It stated on December 5 that the current RIL market price assigns little value to renewables. The company was recommended as a Buy by the firm, with a target price of Rs 2,990.
