RIL share price tanks 8% from record high yesterday, brokerages bullish; check new target price

Since March lows, RIL share price has more than doubled investors’ wealth taking the total market capitalisation above Rs 12 lakh crore mark. Image: Reuters

RIL share price fell 8.5 per cent from previous day’s high to Rs 1,812.25 apiece on BSE after the company in its 43rd annual general meeting (AGM) failed to provide a timeline for the listing of Jio Platforms. The investor sentiment was also hit when the management informed that its deal with Saudi Aramco has not progressed. Since March lows, RIL share price has more than doubled investors’ wealth taking the total market capitalisation above Rs 12 lakh crore mark. Research and brokerages are upbeat on the Reliance Industries stock price post AGM, with an upside of 17 per cent. On the back of 13 investment deals with global technology players, including investments from two FAANG companies, in its digital arm Jio Platforms, net debt-free status, brokerages advise to buy RIL stock.

Mukesh Ambani-controlled Reliance Industries informed shareholders about a delay in RIL-Saudi Aramco deal, a surge in exports during COVID-19 pandemic and increased focus on chemicals. “One of the key reasons for the stock to correct post the AGM was the management’s commentary that the Saudi Aramco deal has not progressed as per expectations and that the company will spin off their O2C business into a separate subsidiary,” said Jyoti Roy, DVP- Equity Strategist, Angel Broking Ltd. He further added that investors were expecting concrete timelines on the proposed listing of Jio Platforms which was not provided by the management which also led to a disappointment among investors. However, a key positive announcement, according to him, was the investment by Google for a 7.7% stake in the company.

Buy RIL stock with 17% upside in target price

Brokerage firm IDBI Capital has revised its rating on RIL stock to ‘buy’ from ‘hold’, with a 17 per cent upside from yesterday’s close. Along with new products announcement, the brokerage firm believes the five accelerators of Jio (i) Mobile broadband, (ii) JioFiber-Gigabit speed Home Broadband service, (iii) Enterprise broadband in combination with cloud solution, (iv) Broadband for SME, and (v) Narrowband Internet of Things (NBIoT) services, has huge potential to significantly increase its contribution to RIL’s overall EBITDA contribution. “We believe collaboration with Google and other marquee names would make a strong case for re-rating of its Jio business valuations,” it said.

Reliance Industries has collaborated with Sibur (Russia), to commission India’s first Butyl Rubber project which positioned it among top 10 producers of Butyl Rubber. Axis Capital has also recommended to ‘buy’ RIL stock with a target price of Rs 2,130 apiece, an upside of 15.38 per cent. “Total capital raise of Rs 2.13 lakh crore through rights issue, strategic/ financial investments in Jio and BP investment helped the company surpass zero net-debt target on a reported debt basis,” it said. It also said that coming out of the capex cycle, RIL provides a unique combination of new and old economy with improving balance sheet health.

Make fresh investment in RIL on dips

Along with Google investment announcement, Reliance Industries informed that the company has concluded its joint venture with BP in its existing fuel retailing business. “The company also said that their target for capital raise is now complete and they now look forward to only adding strategic partners. Brokerage firm Religare Broking remains positive on the company’s long term growth plans, advising to hold the RIL stock. “On the financial side, it has a healthy balance sheet, net debt-free status, strong management and promising growth prospects across businesses. Fresh investment in RIL to be made only on dips,” it said.