Shares of Mukesh Ambani-backed oil-to-telecom giant Reliance Industries snapped their eight-day losing streak and surged the most so far this year after a few international brokerages turned bullish on the stock a day after its touched 52-week low of Rs 2,180.
Reliance Industries rose as much as 4.3 per cent to hit an intraday high of Rs 2273.85. The stock was top gainer in the 30-share Sensex and contributed over 200 points towards gain in the Sensex, data from BSE showed.
According to media reports, international brokerage firms such as JP Morgan, Jefferies and CLSA have maintained their positive view on the company and expect the stock price to appreciate by at least 30 per cent.
CLSA in a report recommended buy on Reliance Industries for target price of Rs 2,970 indicating upside of 36 per cent from yesterday's closing price.
According to CLSA, the current price does not reflect any value to Reliance Industries' new energy foray and is at the same equity valuation for Jio and retail at which company sold stakes three years ago. It has valued RIL’s oil to chemicals segment at a conservative 15 per cent discount to the agreed EV (enterprise value) of $75 billion for the unsuccessful stake sale to Aramco.
The brokerage added that there can be multiple triggers for Reliance Industries in the second half of current financial year. CLSA expects Reliance to ram up its FMCG business, launch services of Airfiber for wireless broadband penetration and launch of new affordable 5G smartphone.
"Recent brand launches (Independence, Campa Cola) suggest we could see visible strides in Reliance’s FMCG foray in 2023. With three years having passed since the stake sale to PE investors, we see a good chance of a Jio and/or retail IPO in the next 12 months. Despite rising 5G capex, consolidated leverage should remain under control and well below 2x Ebitda,” Moneycontrol reported quoting CLSA.
Meanwhile, JP Morgan in a report said that the stock offers long-term investors an attractive opportunity.
“We think the stock offers long-term investors an attractive entry opportunity given the multiple catalysts over CY24-25 (potential listings of consumer businesses, petrochem growth, large 5G capex monetisation, new energy ramp-up), although admittedly more immediate catalysts appear limited,” The Hindu Business Line reported quoting JP Morgan.
Reliance Industries net profit declined in December quarter as government's imposition of Special Additional Excise Duty (SAED) on export of transportation fuels adversely impacted the oil-to-telecom conglomerate.
Reliance Industries' net profit in October-December period declined nearly 15 per cent annually to Rs 15,792 crore compared with Rs 18,549 crore during the same period last financial year.
Imposition of additional excise duty on export of transportation fuels resulted in adverse impact of Rs 1,898 crore on profit, the country's most valuable company said.
Reliance Industries' telecom arm Reliance Jio Infocomm's net profit rose 29 per cent to Rs 4,881 crore compared with Rs 3,795 crore in the third quarter of last financial year. Its revenue rose 21 per cent to Rs 29,195 crore.
Jio's subscriber base rose nearly 3 per cent annually to 432.9 million and its average revenue per user (ARPU), a key metric of telecom company's profitability, improved to Rs 178.2 per subscriber per month compared with Rs 177.2 in the previous quarter and Rs 151.6 in the same period last year, Jio said in a press release.
Sustained subscriber additions and higher ARPU drive revenue and EBITDA growth for the connectivity business. In addition, higher realisations from digital services drives JPL consolidated revenue growth, Jio said.
During the quarter Jio rolled out 5G services in 134 cities across 22 states and Union Terrritories, the company added.
Reliance Industries shares ended 3.2 per cent higher at Rs 2,272, outperforming the Sensex which closed 0.77 per cent higher.