Reliance Industries shares: Why JPMorgan has 'overweight' stance even as stock at 52-week low
1 min read . Updated: 16 Mar 2023, 01:26 PM IST
Premium- Reliance Industries (RIL) shares fell to 52-week low on the BSE
In CY23, global brokerage JPMorgan continues to see Reliance Industries Ltd (RIL) as a relative outperformer in what could be a sluggish earnings environment overall, but see multiple potential catalysts over CY24-25 to help drive absolute outperformance.
“We see continued strength in refining business, a likely rebound in Petrochem spreads from decadal low levels from China re-opening, and volume growth in E&P – driving earnings growth. RIL continues to offer multiple growth optionality across businesses (petrochem, E&P, telecom, retail, financial services, new energy) and ongoing investments should drive the next leg of growth," the note stated.
RIL’s ongoing capex/investments should allow it to scale up its (already Industry-leading) petrochem, telecom and retail segments. New energy is likely a multi-year opportunity, but we do not see it as material to the investment case for next 12- 18 months and JPM expect this year’s RIL annual general meeting (AGM) to focus on Jio Financial Services (JFS). The brokerage has maintained its Overweight (OW) stance with a revised March 2024 target price of ₹2,960 apiece.
“The stock’s multiple compression in the last year appears to mirror the index derating rather than reflect new stock-specific risks. The FII selldown means FII holdings stand at six-year lows. Strong O2C, E&P cash flows allow RIL to continue to invest across businesses," JPMorgan added.
Shares of Reliance Industries hit 52-week low of ₹2,202 apiece on the BSE in Thursday's early trading deals. The stock is down more than 6% in a year's period.
“Jio’s wireless market leadership continues to expand, but the non-telecom business has been slow to pick up. However, retail growth has been strong. While near-term retail growth should slow down in line with softer consumer demand, Reliance Retail’s focus and investments on sq feet additions, omni-channel distribution, multiple brands/acquisition, own brands focus, large warehousing space additions and scaling up new commerce/Jio Mart/FMCG is positive," it added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.