Top brokerages bullish on Reliance, raise price targets

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Mumbai: Analysts at most top brokerages raised or retained share price targets on Reliance Industries (RIL) following the company's March quarter results which were mostly in line with estimates. The stock fell 1.4% to close at ₹2,919.5 on Tuesday The average analyst price target on Reliance after the fourth quarter results stood at ₹3,113.94 - implying an upside of 6.67% over Tuesday's closing.

Analysts said that Reliance's balance sheet remains strong but growth in retail and oil-to-chemical businesses is expected to be muted in the short term, but the company's digital services led by Jio could be a key driver.

HSBC said that the oil-to-chemical business is likely to remain lackluster due to adverse macro factors and new capacity commissioning. Although tariff hikes are awaited in the digital services segment, the stock is expected to be range-bound in the near term due to the company's focus on customer growth over realisation, said the brokerage.

Agencies

"We expect O2C (Oil to Chemicals) to remain steady, retail to recover by 2H24, and digital to await tariff hikes before its next stage of growth," said HSBC in a note. "However, investments in retail will likely yield a return in the medium term and drive longer-term sustained growth."

BNP Paribas said that although the consumer business continues to scale up well, there are limited catalysts in other businesses. Jio will be a key driver in FY25 for the company as the valuations in the telecom sector have gone up in anticipation of a 'larger-than-consensus tariff hike' and Jio is likely to benefit from this since it is the largest telecom operator in India, it said.

"Jio is well poised for FY25 with a likely increase in tariffs and decline in capex driving balance sheet deleveraging," said analysts at BNP Paribas. "In FY25, we think the much-awaited telecom tariff hike will be key to RIL's earnings growth. Digital services (primarily Jio) accounts for 60% of our incremental EBITDA assumption for RIL in FY25."

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