BackReliance Industries shares rise for third session, gain over 2%; here's why
Reliance Industries (RIL) share price rose over 2% on Monday, continuing its upward trend. RIL-BP joint venture started commercial production from the third deepwater field in India's KG-D6 block. The stock is also in focus ahead of the official launch of Jio Phone.
PremiumReliance Industries (RIL) share price rose for the third consecutive session on Monday and gained over 2%. The stock, which has been in an upward trend, increased by around 3% in the previous three sessions and was among the top gainers in the Nifty 50 today. The stock is currently 5.80% away its 52-week high levels. Reliance shares started the day at intraday low of ₹2,553.20 apiece on BSE.
Reliance Industries shares has been in focus as its joint venture with British Petroleum (BP) started commercial production from the third deepwater field in India's KG-D6 block. The MJ field is the latest of the RIL-BP consortium's three significant new deepwater developments.
The three deepwater fields of Block KG D6 off the east coast of India are MJ Field, R-Cluster Field, and Satellite Cluster.
These three fields will probably produce a total of about 30 million standard cubic metres of gas per day.
As per media reports, the company also sold 1.23 crore compulsory convertible preference shares, or 2.89% of the fully diluted share capital, of Viacom 18 to Bodhi Tree Systems.
In addition, attention is focused on the stock ahead of the official launch of the Jio Phone, which is expected for later this evening.
According to Vinit Bolinjkar, Head of Research, Ventura Securities, over the past one month, RIL’s stock price has rallied from ₹2470 to ₹2600 and at current levels we are bullish on the stock due to the following;
1) Recovery in polymer margins led by China’s reopening and likely removal of SAED on diesel/ATF would support recovery in O2C profitability.
2) Telecom tariff hike is expected to improve Jio’s ARPU and enhance its cash flow, which could ease the debt burden on the balance sheet
3) Improvement in asset utilisation of the existing retail stores, which are near their maturity, could also ease working capital pressure.
4) Development of a large-scale green H2 ecosystem, which is expected to open a new growth opportunity for the company in the green energy space.
“The upcoming developments in the telecom (for 5G network) and green H2 space are anticipated to result in higher capital investment for the company over the next three years. Nonetheless, this strategic diversification and the potential for substantial business growth present remarkable opportunities for the company," added Bolinjkar.
Further, Reliance Industries is one of JPMorgan's top bets in the sector, with a price target of ₹2,960 and an overweight rating. On the other side, Geojit BNP Paribas, has given ‘buy’ rating on the stock with revised target price of ₹2,747.
“With the reopening of China, global oil demand is expected to pick up in the second half of FY24 which will help boost RIL’s petchem margins. It aims to focus on expanding its retail segment and footfalls aggressively, and in the near-term, make new forays in the fast-moving consumer goods and beauty business. We expect its telecom business to continue adding subscribers and expanding the 5G network. The company plans to focus on new giga energy projects to transform the renewable energy vertical," said the brokerage in its report.
Reliance Industries outperformed street expectations by recording double-digit profitability growth in the quarter ending March 2023 (Q4FY23). The company said its consolidated annual EBITDA crossed benchmark of ₹150,000 crore for the first time during FY23 up by 23.1% YoY from ₹125,687 crore in FY22.
The consolidated profit after tax of Reliance Industries was ₹21,327 crore in Q4FY23 up by 18.3% from ₹18,021 crore during Q4FY22. Net profit stood at ₹74,088 crore during FY23 up by 14% YoY from ₹65,009 crore in FY22.
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“The stock has indicated a big positive candle giving a breakout above the previous peak zone of 2,580 levels to improve the bias and sentiment with indicators getting strong and has immense upside potential from here on. With near term support of 2,520-2,530 levels one can stay invested for further upside targets of 2,680-2,750 levels in the coming days," said Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher Pvt Ltd.
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