RIL Share Price: Shares of Reliance Industries Limited saw a rise of more than 4 percent today on January 17. The rise came after news that brokerage firms had raised their target prices on the company’s stock and reaffirmed its ratings following a strong performance in the December quarter. Shares of Reliance Industries rose 4.4% to an all-time high of Rs 1,325 per share during early trade. At 10:19 am, the shares were trading at Rs 1,294 per share on BSE, indicating a gain of 2%. In comparison, Sensex was trading at 76,664 points with a decline of 0.5 percent.
Nuvama Research maintained its buy advice on Reliance shares and increased its target price to Rs 1,673 per share. At the same time, Motilal Oswal has also reiterated his buying advice on this stock and increased its target price by 26 percent to Rs 1600 per share.
While Kotak Institutional Equities maintained “ADD” rating on the stock with a new target price of Rs 1,435 (earlier Rs 1,405). HDFC Securities also maintained “ADD” rating with a target price of Rs 1,670 per share.
According to analysts, the company’s target price has been increased considering the improvement in margins of the oil-to-chemicals (O2C) business, increase in EBITDA of the digital business and potential opportunity for value unlocking in the retail and digital segments.
How will the third quarter results be?
Reliance Industries’ Q3 results were positive, especially in the organized retail and O2C segments. EBITDA of retail business recorded a growth of 9.1% on annual basis and 16.7% on quarterly basis. This performance beat estimates by more than 8%. The retail segment saw a 37% year-on-year growth in B2C grocery sales.
In the oil-to-chemicals (O2C) business, EBITDA grew by 2.4% year-on-year and 16% quarter-on-quarter. This was 7% more than expected. EBITDA in the E&P (exploration and production) segment grew 5.2% quarter-on-quarter to ₹56 billion. The total EBITDA of Reliance Industries increased by 8 percent on an annual basis and 12 percent on a quarterly basis in the December quarter, which reached Rs 438 billion.
However, the performance of the telecom segment was weaker than expected as the benefits of the tariff hike in July 2024 did not materialize fully. Despite this, the loss was offset by strong performance in the remaining segments.
Announcement of IPOs can prove to be a trigger for shares
Clarity on the IPO launch of the company’s digital and retail segments could be a trigger for the stock in the coming months. Meanwhile, JM Financial said that Reliance’s capital expenditure (capex) may gradually reduce, which will lead to reduction in net debt. The company had committed a capex of Rs 2.3 lakh crore in FY23, while it is expected to be Rs 1.2-1.4 lakh crore in FY24 and FY25.
Attractive opportunities for investors
Analysts say shares of Reliance Industries had recently fallen by 17%, making their valuations more attractive for investors. At current market prices, Reliance Industries’ P/E multiple for FY27E is 16.3x, lower than the last 3 years’ average of 24.7x. Similarly, EV/EBITDA for FY27E is 8.6x, lower than the previous average of 12.6x.
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