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Reliance Industries Ltd (RIL), India's most valuable company, reported a 22.5% surge in fourth-quarter profit to 16,203 crore on the back of bumper oil refining margins, steady growth in telecom, digital services and retail business. Shares of RIL plunged over 2% to 2,564 apiece on the BSE in Monday's opening deals, dragging Sensex by 800 points.

The Mukesh Ambani-led conglomerate's revenue from operations rose 37% to 2.11 lakh crore during the quarter ended March 31, 2022. It has become the first Indian company to have crossed $100 billion revenue in a year.

"The stock should benefit from three areas: accelerated EBITDA growth in Retail business, which garners about 4x higher valuation multiple v/s overall business; Reliance Jio’s steady revenue growth from market share gains, tariff hikes and other wireline/digital avenues; and better refining margin that should translate into 20% EBITDA growth in the standalone business," said brokerage Motilal Oswal.

The brokerage firm has reiterated Buy rating on Reliance Industries shares with a target price of 2,935 apiece. Motilal Oswal said its higher EV/EBITDA multiples of 38x for RIL's Retail (core segment) and 19x for digital services underscore new growth opportunities in the Digital space and steady market share gains.

“We raise FY23/24E GRM from USD10/bbl each to USD16/13 due to the RussiaUkraine conflict-related issues and the overall tightness in oil-product markets. We expect petchem earnings to also improve gradually, as cracker rates normalize and new capacity is absorbed. We build in higher upstream gas prices as well," said another brokerage Emkay in a note.

The brokerage has retained its Hold rating/equalweight (EW) stance on RIL shares with target price of 2,850. Emkay sees adverse commodity/currency; B2C competition; and new business risks as key risks.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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