What could spark a big rally in RIL shares, according to analysts

  • Jefferies said it incorporates the higher capex and earnings upside from Reliance Jio and O2C

Livemint
Updated31 Aug 2022, 12:28 PM IST
Reliance Industries (RIL)
Reliance Industries (RIL)(REUTERS)

Reliance Industries Ltd's (RIL) 45th annual general meeting (AGM) touched upon the company’s ambitious plans across business verticals, particularly the ensuing 5G launch, foray into the FMCG space, and new energy investments.

The AGM laid out the succession blueprint along expected lines and new phase of capex on new growth platforms. Reliance Jio laid out 2 tn investment plan on 5G with pan-India roll-out by December 2023 while Retail announced entry into fast moving consumer goods (FMCG) business. Renewable transition roadmap provided capex and commissioning timelines. 

“We incorporate the higher capex and earnings upside from Jio and O2C. We increase our capex est for FY23/24/25E to Rs1.59/1.55/1.59 tn respectively, to factor in higher capex in Jio, conventional O2C and New Energy businesses. We also build in US$9bn valn of the O2C capex and higher subs in the home broadband segment,”  said global brokerage Jefferies. It has maintained its Buy rating on Reliance Industries shares with target price of 2,980.

Retail, Telecom, and new energy can be the next growth engines over the next two-to-three years, given the large technological advancements and ambitious growth targets. However, the same can dent its existing single-digit return ratios in the near term, as per Motilal Oswal.

“We expect consolidated revenue/EBITDA to clock 13%/15% CAGR over FY22-24, which does not factor any incremental growth from 5G capex, new energy, and other segments. Retail, Telecom, and new energy can be the next growth engines over the next two-to-three years, given the large technological advancements and ambitious growth targets. However, the same can dent its existing single-digit return ratios in the near term,” the note stated. It has reiterated its Buy rating with a target price of 2,880.

Analysts at Prabhudas Lilladher believe RIL’s business segments are very well positioned to benefit from segment tailwinds, given its solid leadership position and well integrated business structure. Further, the company is best placed to incubate new businesses and pursue inorganic opportunities with its liquid BS. It has also maintained ‘BUY’ at price target of 3,165.

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

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$5 M

394,000

$112 B

12.1%

₹133.50 Cr

₹12,300 Cr

$136 M

First Published:31 Aug 2022, 12:28 PM IST
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