Reliance Industries’ Positive Outlook Drives 1% Share Price Gain

Reliance Industries' Positive Outlook Drives 1% Share Price Gain

VoM News Desk | December 7, 2023 | 12:10 PM IST | Breaking News | Follow on Google News

Reliance Industries’ Positive Outlook Drives 1% Share Price Gain

Reliance Industries’ Positive Outlook Drives 1% Share Price Gain

Reliance Industries witnessed a gain of more than 1% in its share price on Wednesday, contributing positively to the support and upside potential of the indices, given its significant weightage in the Nifty. Despite underperforming the Nifty by around 9% during the calendar year, the outlook for Reliance Industries is improving, particularly with the rebounding refining margins in the Oil to chemicals business.

Business Segments Impact and Potential Growth Drivers

While the petrochemical oversupply remains a concern, analysts highlight that this is not a substantial risk to earnings as Retail and Telecom, the consumer-facing businesses, contribute more than half to operating performance. The positive outlook is further supported by potential triggers in the telecom and retail businesses, such as tariff hikes and additional opportunities contributing to earnings growth.

Gains Expected in Renewable Equipment Business

Analysts at Jefferies India anticipate gains for Reliance Industries driven by the renewable equipment business. The commissioning of phase I PV (photovoltaic) module and storage capacity in mid-CY2024 is expected to contribute to the company’s profitability. Factors such as Chinese overcapacity, the government’s installation targets, lower bidding intensity, custom duties on Chinese imports, and the implementation of ALMM (approved list of models and manufacturers) are seen as favorable for Reliance Industries’ renewable equipment business.

Favorable Risk-Reward and Potential Stock Gains

Jefferies notes that Reliance Industries’ stock is currently trading at a discount to its 5-year average forward EBITDA (earnings before interest, tax, depreciation, and amortization). The analysts highlight the favorable risk-reward scenario, citing potential triggers in 2024, including tariff hikes, faster broadband subscription growth, and lower capital expenditures in Jio and Retail for FY25. They expect gains of more than 20% for the stock, which is currently trading at ₹2,460 levels, with a target price of ₹2,990.

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VoM News Desk

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