Why Jefferies is bullish on Reliance Industries stock amid market turmoil

Shares of Reliance Industries have received thumbs up from global research and broking firm Jefferies after the recent correction. Jefferies sees a 16 per cent upside to the stock. It has retained its buy call with a target price of Rs 2,950 per share.

The research firm said that the correction in the stock offers opportunity adding that there are tailwinds to refining margin in CY22.

The stock has corrected 10 per cent from its recent peak. "We reiterate buy with Rs 2,950 as the target price," Jefferies said.

According to Jefferies', multi-year low inventories, declining Russian exports, muted Chinese exports, lower diesel production in Europe and delays in commissioning of ME refineries are tailwinds to refining margins in CY22.

"Reliance Industries is a key beneficiary of energy inflation, with every $1 per barrel improvement in annualised refining margins, adding an estimated $400-450 million to RIL's consolidated EBITDA. Our initial estimates suggest RIL's oil-to-chemical business EBITDA could rise 60 percent on quarter in Q1 this year and account for 35 percent of our FY23 estimate. Continued strength in refining should result in consensus FY23 earnings upgrades," Jefferies added.

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Meanwhile, shares of RIL were trading lower in early morning deals in line with the broader markets.

The RIL stock slipped up to 2.18 per cent to Rs 2,528 against the previous close of Rs 2,584.55 on BSE. The large-cap stock trades higher than 100-day and 200-day moving averages but lower than 5-day, 20-day and 50-day moving averages.

The stock has gained 14 per cent in a year and risen 7.11 per cent in 2022.

Total 0.59 lakh shares of the firm changed hands amounting to a turnover of Rs 14.92 crore on BSE. The market cap of the firm fell to Rs 17.15 crore on BSE.

The stock hit a 52-week high of Rs 2,855 on April 29, 2022 and a 52-week low of Rs 2,016 on July 28, 2021.