RIL share price near all-time high; should you buy or sell? Check Goldman Sachs, Morgan Stanley rating

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Updated: Jun 17, 2020 4:07 PM

The rally in RIL share price has been propelled by the 10 foreign investment deals in two months, which helped the oil-to-telecom conglomerate to raise Rs 1.04 lakh crore by selling just over 22 per cent equity stake in Jio Platforms.

RIL, reliance Industries share price, RIL share priceAnalysts at Goldman Sachs have reinstated their ‘buy’ rating on RIL with a price target of Rs 1,755, an 8.5 per cent upside

Reliance Industries shares were trading near 52-week high level in Wednesday’s volatile trade. RIL share price was up over 1 per cent at Rs 1,635 apiece on BSE, with a market capitalisation of Rs 10,31,199.06 crore. In March this year, RIL shares hit a 52-week low of Rs 867.82, since then the share price has risen nearly 90 per cent to hit a record high of Rs 1,648 in yesterday’s session. The rally in the stock has been propelled by the 10 foreign investment deals in two months, which helped the oil-to-telecom conglomerate to raise Rs 1.04 lakh crore by selling just over 22 per cent equity stake in Jio Platforms. The highest stake, 9.99 per cent, has been picked up by the social media giant Facebook for Rs 43,574 crore, so far.

“Despite the 25ppt YTD outperformance versus Sensex, we see multiple triggers- asset sales (telecom infrastructure, fuel retail), pick-up in energy cash flows, increased traction in omnichannel retail and rise in telco ARPUs, driving further outperformance,” Morgan Stanley said in its latest research report. According to the brokerage firm, RIL can achieve zero net debt in the next nine months on the back of a 50% stake in retail fuel stations to BP; completion of stake sale in Jio Platforms and tower InViT stake sale; and positive FCF generation from steady energy utilisation and slowing investments. The brokerage firm has given an ‘overweight’ rating to the stock with a 12-month price target of Rs 1,801, an upside of over 10 per cent. “The on-track sale of a stake in the oil to chemicals business to Saudi Aramco and remaining rights issue proceeds should also further reduce liabilities,” it added in the report.

Analysts at Goldman Sachs have reinstated their ‘buy’ rating on RIL with a price target of Rs 1,755, an 8.5 per cent upside from yesterday’s close, for one-year investment. The brokerage firm has predicted RIL’s grocery retail gross merchandise value (GMV) at $8,300 crore by FY29, up from $500 crore in FY20 due to continued store expansion-driven market share in the offline grocery, and rapid expansion of the total available market (TAM) in online grocery. “While we forecast share gains and steady margins for Reliance Retail’s offline fashion & lifestyle and consumer electronics businesses, we also assess the potential upside to RIL from non-grocery e-commerce, which could range from 4%-19% of our current valuation,” analysts at Goldman Sachs said in the latest research report.

Last month, another foreign brokerage CLSA also gave RIL a ‘buy’ rating on the back of its success at ongoing beta tests in Navi Mumbai, which uses WhatsApp as a platform to order. ” Monetising the reach of Jio and WhatsApp as customers for Reliance’s ecommerce and digital offering will see the fruition of Reliance’s grand plan over the coming years,” said the brokerage.

Along with Facebook, Reliance Industries roped in Silver lake, US-based Vista Equity Partners, Global equity firm General Atlantic, US private equity giant KKR, Abu Dhabi sovereign wealth fund Mubadala Investment, Abu Dhabi Investment Authority (ADIA), as investors in Jio Platforms. The latest investment came in from global investment firm TPG and private equity firm L Catterton, over the weekend.

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