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Shares of Reliance Industries Ltd., the Nifty 50 heavyweight and Mukesh Ambani-owned oil-to-telecom-to-retail conglomerate, have a potential upside of 36%, according to global brokerage firm Morgan Stanley, which has maintained its bullish stance on the counter.
Reliance shares have corrected 24% from its recent peak of ₹1,608.80, adjusted for the 1:1 bonus issue of shares.
Morgan Stanley has maintained an ‘Overweight’ rating on Reliance Industries Ltd, with a price target of ₹1,662 per share.
In its report, the brokerage highlighted that Reliance's refining margins are beginning to recover after two challenging quarters. It also noted an increase in permanent refinery capacity shutdowns.
Despite a $50 billion reduction in market capitalisation during Q4, the stock appears to be reflecting challenges across key business segments but not factoring in potential improvements.
Morgan Stanley expects the company's free cash flow engine to pick up pace as approximately 0.6 million barrels per day of refining capacity are expected to shut down globally by 2025.
Additionally, net capacity additions are expected to be only half of the growth in demand.
Morgan Stanley mentioned that the outlook for the New Energy segment has also improved, with China limiting the production of new solar panel capacity.
JPMorgan has maintained an ‘Overweight’ rating on Reliance Industries, with a price target of ₹1,468 per share.
The foreign brokerage noted that one of the key factors behind the stock's recent underperformance—weak refining margins—has now reversed.
Another brokerage house JPMorgan said that the slower growth in retail topline has been difficult to predict, but expectations around this segment have significantly reduced.
Following the stock's correction, the estimated implied valuation for the retail business stands at 25 times its FY26 EBITDA estimates, which is lower than historical averages and below peer retailer valuations.
Additionally, the launch of Reliance's solar panel plants could serve as a modest short-term growth driver.
Out of the 38 analysts that have coverage on Reliance Industries, 31 of them have a 'Buy' recommendation, four of them say 'Hold', while three have a 'Sell' rating on the stock.
Shares of Reliance Industries settled 1.71% lower on Thursday at ₹1,220.45. The stock has turned negative on a year-to-date basis so far, currently down about 6% for the year.
Reliance shares have corrected 24% from its recent peak of ₹1,608.80, adjusted for the 1:1 bonus issue of shares.
Morgan Stanley has maintained an ‘Overweight’ rating on Reliance Industries Ltd, with a price target of ₹1,662 per share.
In its report, the brokerage highlighted that Reliance's refining margins are beginning to recover after two challenging quarters. It also noted an increase in permanent refinery capacity shutdowns.
Despite a $50 billion reduction in market capitalisation during Q4, the stock appears to be reflecting challenges across key business segments but not factoring in potential improvements.
Morgan Stanley expects the company's free cash flow engine to pick up pace as approximately 0.6 million barrels per day of refining capacity are expected to shut down globally by 2025.
Additionally, net capacity additions are expected to be only half of the growth in demand.
Morgan Stanley mentioned that the outlook for the New Energy segment has also improved, with China limiting the production of new solar panel capacity.
JPMorgan has maintained an ‘Overweight’ rating on Reliance Industries, with a price target of ₹1,468 per share.
The foreign brokerage noted that one of the key factors behind the stock's recent underperformance—weak refining margins—has now reversed.
Another brokerage house JPMorgan said that the slower growth in retail topline has been difficult to predict, but expectations around this segment have significantly reduced.
Following the stock's correction, the estimated implied valuation for the retail business stands at 25 times its FY26 EBITDA estimates, which is lower than historical averages and below peer retailer valuations.
Additionally, the launch of Reliance's solar panel plants could serve as a modest short-term growth driver.
Out of the 38 analysts that have coverage on Reliance Industries, 31 of them have a 'Buy' recommendation, four of them say 'Hold', while three have a 'Sell' rating on the stock.
Shares of Reliance Industries settled 1.71% lower on Thursday at ₹1,220.45. The stock has turned negative on a year-to-date basis so far, currently down about 6% for the year.
Note To Readers
Disclosure: Reliance Industries Ltd, which owns Jio, is the sole beneficiary of Independent Media Trust that controls Network18, the parent company of CNBCTV18.com.
First Published: Nov 22, 2024 8:23 AM IST
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