Reliance Industries' share price that had risen 11.78% during 2023 however had underperformed benchmark Nifty-50 index that had gained more than a 20% during 2023. As the wait for fresh triggers continued, analysts however maintain a bullish outlook on Reliance Industries during 2024.
Key reasons for analysts maintaining positive outlook- These include reasonable valuations the stock now trades at. Furthermore, the expectations remain high for consumer-oriented businesses as that of telecom and retail that now contribute more than half to Reliance Industries consolidated operating profits. The Capex cycle is behind, and the profitability improvement may be driven further by any tariff hikes in Jio. Expectations from Oil to chemical business remain muted looking at current volatility in refining margins and petchem prices. Nevertheless value discovery in new energy businesses can drive upside. Meanwhile investors will be eyeing listing of Jio for further value unlocking.
Jefferies India Pvt Ltd maintain Buy ratings. Analysts at Jefferies have maintained Buy ratings on Reliance Industries with target price of ₹3125 for stock trading at about 2600 levels in their recent report. They said that Reliance Industries underperformed Nifty by 9% in Calendar year 2023 and trades cheap relative to Nifty. They forecast 13% Ebitda growth in FY25 with Jio contributing two-thirds share on the back of a tariff hike. Ebitda stands for Earnings before interest tax depreciation and amortisation. They expect capex to decline in Jio and Retail in FY25, helping improve free cash flows, abating concerns about a rise in net debt.
While the oil to chemical profitability for Reliance Industries in FY25 is likely to remain rangebound, valuations of Reliance Industries are reasonable and a possible listing of Jio and value discovery in New energy business could drive upside for the stock.
Reliance Retail outlook remains healthy. Analysts at Jefferies forecast 25% and 22% Revenue and Ebitda growth in FY25 respectively, as network addition moderates and throughput ramps up. Amidst high growth expectations, they believe peak capex is behind as store addition moderates and back-end infra is largely in place helping improve cash generation.
Reliance Jio- Tariff hike and possible listing keeps analysts optimistic. In FY25, analyst at Jefferies expect Reliance Jio to deliver a healthy 20% year on year growth in revenues led by tariff hikes in the mobile segment and continued traction in non-mobile segment. They expect a 170bps expansion in margins due to operating leverage to drive 24% year on year Ebitda growth.
Oil to chemicals profitability to remain rangebound - Ebitda growth is expected to be just 5% yoy during FY25 as per Jefferies, on flat refining margins and some recovery in petrochemicals from . On refining front the blending of cheap Venezuelan crude should cushion softness in benchmark Singapore GRMs year-on-year as global demand growth slows and capacity additions rise. Petchem margin outlook is weak in FY25 as per Jefferies though Indian national election is likely to boost demand and domestic premiums.
Bernstein adds Reliance to its model portfolio
Analysts at Bernstein too have a positive outlook on Reliance Industries including it in their model portfolio for 2024.
Reliance as per Bernstein analysts is perhaps the stock not just to play a sector or two but to play the India theme; hence, it's more of a necessity in the portfolio of anyone with a bullish view on India. From a cash cow energy sector to Retail and Telecom, Reliance appears best positioned to capture gains, said Bernstein analysts.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
