Shares of Reliance Industries (RIL) continued their northward movement to hit an over seven-month high of Rs 2,250, up 2.2 per cent, on the BSE in intra-day trade on Thursday amid expectations of a good operational performance going forward.
The stock was quoting higher for the seventh straight trading day. It has rallied 15 per cent during this period. The scrip was quoting at its highest level since October 15, 2020. It had hit a record high of Rs 2,368.80 on September 16, 2020.
RIL is India’s one of the largest conglomerate with its foray in oil refining & marketing, oil & gas exploration, petrochemicals, organised retail, media and digital services (Jio) making it a well-diversified business entity.
"RIL’s traditional business will keep generating cashflows as the macroeconomic situation continues to improve. The new consumer businesses, Jio and retail, will be the growth driver for the company in the coming years. The company has a strong balance sheet post raising of funds which is a positive. Growth in retail and digital services coupled with improvement in oils to chemicals (O2C) performance will drive the operating performance going forward," ICICI Securities said in a stock update.
In a report last Friday, analysts at Jefferies maintained their ‘buy’ rating on RIL with a target of Rs 2,580. Polymer spreads, they believe, are at a decade-high on strong downstream demand. “Buoyed by polymers that comprise 45 per cent of its petchem portfolio, RIL’s portfolio level spread is nearing its decade high and is 30 per cent ahead of our estimate for FY22,” Jefferies’ analysts Bhaskar Chakraborty and Pratik Chaudhuri stated.
“RIL's petchem segment earnings before interest, taxes, depreciation, and amortisation (Ebitda) could be 50 per cent ahead of our estimate on operating leverage benefits if the current spreads were to sustain over FY22. This could drive 14 per cent upside to our consolidated Ebitda estimate,” they added. CLICK HERE TO READ FULL REPORT
Meanwhile, addressing shareholders in the Integrated Annual Report 2020-21, company Chairman and Managing Director Mukesh Ambani said, “Strong operating cash flow and largest ever capital raise further strengthened our balance sheet, enabling us to deleverage and meet our net-debt zero commitment ahead of the stated timeline. We now have a strong balance sheet, with high liquidity that will support growth plans for our three hyper-growth engines — Jio, Retail, and O2C,” he said.
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