Jefferies maintained a buy rating on Reliance Industries, setting a target price of Rs3125, reflecting an optimistic upside of 21% from the current market price.
Despite underperforming the Nifty by 9% in the calendar year 2023, Jefferies sees significant potential in the stock, highlighting its favorable valuation compared to the broader market.
The report forecasts a robust 13% EBITDA growth for Reliance Industries in the fiscal year 2025. Notably, the report suggests that Jio, a telecom subsidiary of Reliance, could contribute two-thirds of the company’s share, driven by an expected tariff hike.
Jefferies also expects a decline in capital expenditure (capex) for Jio and the retail segment in the fiscal year 2025, a factor that is seen as instrumental in improving free cash flow and mitigating concerns surrounding a potential increase in net debt.
The report also notes a lowered EBITDA forecast for the fiscal years 2024 and 2025 by 2% and 1%, respectively, attributed to decreased profits in the Online-to-Offline (O2O) segment.
However, Jefferies believes that the potential listing of Jio and the value discovery in the new energy sector present upside risks for Reliance Industries.