Reliance stock call: Good opportunity to buy RIL, says Jefferies after share price tanks 14% in 2 months

Reliance Industries share price rose nearly 2 per cent to Rs 2,510.95 apiece on BSE on Friday, as earlier this week global brokerage firm Jefferies reiterated its buy rating to the stock.

Reliance Industries, Jefferies
Jefferies said that correction in the oil-to-telecom conglomerate share offers an opportunity to buy the counter.

Reliance Industries share price rose nearly 2 per cent to Rs 2,510.95 apiece on BSE on Friday. Earlier this week global brokerage firm Jefferies reiterated its ‘buy’ rating on RIL stock. Mukesh Ambani-led RIL’s share price has corrected nearly 14 per cent from its peak of Rs 2,855 in April this year. Jefferies said that correction in the oil-to-telecom conglomerate share offers an opportunity to buy the counter. It has pegged a price target of Rs 2,950, a potential upside of 19.7 per cent from last close.

RIL could deliver 60% sequential growth in O2C Ebitda in 1QFY23E

Multi year-low inventories, declining Russian exports, muted Chinese exports, lower diesel production in Europe and delays in commissioning of ME refineries are key tailwinds to refining margins in CY22, Jefferies said. The initial estimates of the global brokerage suggested that RIL could deliver 60% sequential growth in O2C Ebitda in 1QFY23E with likelihood of earnings upgrade.

RIL growth engines: Jio, Reliance Retail, COTC

Jefferies also noted that RIL is a key beneficiary from the energy inflation, with every $1 per barrel improvement in annualised refining margins adding an estimated $400-450 million to RIL’s consol EBITDA (2% uplift). It said that continued strength in refining should result in consensus FY23E earnings upgrades. Jefferies believes RIL has sustainable competitive advantage on scale economics, cost leadership, financial strength, recurring positive FCF FY22E onwards. Its new growth engines with large addressable markets — Digital in Jio, e-commerce in RR, COTC (crude-oil-to-chemicals) in energy.

RIL among few large Indian companies with a positive earnings revision cycle ahead

Last week, JP Morgan India upgraded its rating on Reliance Industries Ltd (RIL) to ‘overweight’ from ‘neutral’ earlier, and has pegged a price target of Rs 3,170 apiece. The brokerage firm had said that the oil to telecom conglomerate is among the few large companies in India with a positive earnings revision cycle ahead, given the strong refining and gas environment. 

RIL share price has lost 4 per cent in 5 days, and 5.2 per cent in one month. While in the last one year, the stock has jumped 15.2 per cent, and just 3.2 per cent so far in the year 2022.

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