Shares of Reliance Industries rose 3.5 percent on Wednesday as markets recovered after a 5-day slump.
Just in 2022, the blue-chip firm has surged over 15 percent, in comparison, the benchmark Nifty50 is down around 1.5 percent in this period.
Despite this rise in the largecap stock, brokerages expect continued upside in the stock in the near future. Goldman Sachs has a target price of ₹3,200 per share. 34 analysts polled by MintGenie also have a ‘buy’ call on the stock.
“We maintain our Buy rating. Key risks include lower-than-expected refining/chemical margins, lower-than-expected ARPU, lower-than-expected market share and margins in the retail business, project delays and higher future Capex,” Goldman Sachs said in a recent note.
Meanwhile, Motilal Oswal has a target price of ₹2,880 per share on the stock. Key downside risks involve slower-than-expected traction in the Jio and Retail segments, noted MOSL.
Goldman Sachs sees Reliance as a unique energy transition story. It said that RIL’s strong cash flow generation from the best in class old energy business can fund the Capex of the New Energy business and in turn drive one of the fastest and most profitable net-zero transitions by 2035 amongst large energy companies.
“We see refining tailwinds to sustain given improved supply-demand from closures, jet fuel demand recovery ahead, lower Chinese exports, low inventory and supply disruption. With rising penetration and market share wins ahead in consumer businesses (telecom tech and retail), we see the medium-term growth story remaining intact as well,” it said.
Meanwhile, Motilal Oswal recalled that a decade back, investors had concerns on investments of RIL in both Jio and Retail. However, RIL turned both businesses around. In fact, due to better prospects, Jio and Retail command a staggering two-thirds of the total valuation currently, it added.
Could a similar turnaround be seen in the new-energy business is a thing that investors will have to wait and watch, said MOSL.
“These new-age initiatives involve cutting edge fast-evolving technologies that are in nascent stages now. Hence, it is difficult to say — at this stage — if RIL would be able to score a hat-trick after its successful turnarounds of Jio & Retail,” Motilal Oswal stated in the note.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.