ICICI Direct recent published a report on Reliance Industries Ltd. recommended investors buy the stock of the company for a target price of Rs 2,800/share. Reliance Industries is one of India’s biggest conglomerates with a presence in oil refining & marketing and petrochemicals, oil & gas exploration, retail, digital services and media, etc, making it a well-diversified business entity. At the EBITDA level in FY22, O2C and oil & gas contributed 49% while retail, digital and others contributed 10%, 34% and 7%, respectively.
The share of Reliance Industries Ltd closed on Friday at Rs 2,408.70/share, today, Monday it opened at Rs 2,378.95/share, while the Current Market Price of teh stock is Rs 2,427.95/share on NSE. The 52-week low of stock is Rs 2,016.25/share, recorded on 28 July 2021, while the 52-week high is Rs 2,856.15/share recorded on 29 April 2022. According to the estimated target price of Rs 2,800/share and the CMP of the stock, the shares of the company have a strong potential to gain nearly 18%.
Over the past 3 months, the stock witnessed a fall of nearly 9.31%, whereas, in the past 1 month, it has fallen 8.54%. However, it also gave positive returns on long-term investment i.e. 1year, 3 years and 5 years. In the past 1 year it gave 14.81%, 3 years 89.83% and 249.09% in past 5 years, respectively.
|CMP||Target Price||Potential Gains|
|Rs 2,427.95||Rs, 2,800||18.00%|
Government of India has imposed additional excise duty of Rs 13/litre on diesel exports. Also, excise duty on petrol and ATF exports was raised by of Rs 6/litre.
RIL has total refining capacity of 68 MMTPA and one of the refineries is export focused. Product cracks of diesel, petrol and ATF continue to trade at elevated levels. While the company is expected to report a sharp surge in profit in Q1FY23E, excise duty on product exports is likely to limit gains in the refining segment, going ahead, as per our understanding.
The government will review the excise duty for recalibration every 15 days. The strategy of the company regarding export volume and global refining scenario will be the key monitorable in the near term.
Key triggers for future price performance
Increment value accretion from the ‘digital ecosystem’ that will be captured at the Jio Platforms (JPL) level. Steady FCF generation in the retail segment would enable the company to maintain debt at lower levels and improve its ability to invest in future inorganic opportunities. Steady cash flow in O2C segment is expected to continue amid favourable global scenario and will enable Reliance Industries Lltd to invest in new energy verticals.
ICICI Direct Suggests Buy for Target Price of Rs 2,800/share
Long term prospects and dominant standing of RIL in each of its product & service portfolio, provide comfort for long term value creation. RIL’s consumer business will be the growth driver, going ahead. The company has a strong balance sheet while its traditional business will continue to generate steady cash flows amid a favourable global scenario. We maintain our BUY rating on the stock. On an SOTP basis, we value the stock at Rs 2800/share.
About – Reliance Industries Ltd
Reliance Industries Limited is one of India’s biggest conglomerates with a presence in oil refining & marketing and petrochemicals, oil & gas exploration, retail, digital services and media, etc, making it a well-diversified business entity. Reliance Industries Limited is a Fortune 500 company and the largest private-sector corporation in India. It has evolved from being a textiles and polyester company to an integrated player across energy, materials, retail, entertainment and digital services. Reliance’s products and services portfolio touch almost all Indians on a daily basis, across economic and social spectrums. Reliance was founded by Dhirubhai Ambani and is now promoted and managed by his elder son, Mukesh Dhirubhai Ambani.
The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.