Jefferies sees RIL at Rs 3,400; MS bullish on underperforming TechM

NEW DELHI: Foreign brokerage Jefferies has maintained its buy call on Industries with a target of Rs 3,400. Credit Suisse, another foreign broking firm, has maintained its underperform rating on Avenue Supermarts (DMart) with a target of Rs 3,600. In another instance, Morgan Stanley has maintained its overweight call on with a target of Rs 2,100.

Jefferies noted that shares of Reliance Industries underperformed Nifty50 by 5 percent in 2021 and believes this underperformance will reverse. Retail and Jio will drive growth for Reliance, it said. It forecast 36 per cent Ebitda compounded annual growth rate (CAGR) for Reliance Retail on store additions.

On the other hand, it estimated tariff hike-driven 21 per cent Ebitda CAGR in Jio over FY22-24.

In case of Tech Mahindra, Morgan Stanley believes the stock's price will rise relative to the country index over the next 60 days. It noted that revenue growth gap with peers has narrowed and margin performance remains stable. It, thus, sees valuation gap with peers such as Infosys to narrow going ahead.

On Avenue Supermarts, Credit Suisse said the revenue growth was underwhelming in the context of large retail space expansion. It was also underwhelming on a 2-year basis in the context of high space addition. Ebitda margin expansion though was driven by good cost efficiencies, it said.

Meanwhile, Jefferies said it recommends a bottom-up stock picking approach in midcaps. It said it prefers market leaders across various sectors. It likes Crompton, Dixon, Kajaria Ceramics, among others.