RIL Hits New 52-Wk Low; Jefferies Bullish, Pegs 41% Upside, Notes Key Triggers

By Malvika Gurung

Investing.com -- The oil-to-telecom conglomerate stock Reliance Industries (NS: RELI ) hit a fresh 52-week low in a weak market on Monday at Rs 2,183.1 apiece, trading 1.35% lower at 12:15 pm and extending losses to the eighth straight session on March 20, 2023, as per Investing.com data.

Despite the downward streak, global brokerage and research firm Jefferies is bullish on the stock and reiterated its Buy tag on Reliance with a target price of Rs 3,100/share, which is an upside of 41.35% from its current share price.

The brokerage sees a limited downside to earnings with tariff hikes pushed out, and attributes little value to new businesses at the current market price (CMP), adding that Reliance’s forward earnings multiples are the lowest since Covid-19 and are at a discount to the 5-year average.

“Tariff hike, acceleration in retail throughput, removal of export duty and China's demand recovery are triggers,” Jefferies said.

The conglomerate giant’s stock has fallen 18% since November and is trading at a 6% discount to the long-term average price-to-earnings ratio.

According to the global brokerage, the key concerns raised by investors in RIL’s case include slower growth in the Retail segment despite rapid floor space addition, an increased rise in capex, and an advancing debt level.

Jefferies projects a 30% growth in core revenue and 25% Ebitda growth in FY24E. ‘Capex run rate should peak out over FY23-24E’, it adds.

Risks noted by the brokerage firm include ‘lower-than-expected tariff hikes in Jio, elevated cash burn in e-commerce, lower refining and/or petrochemical margins, FCF disappointment and inadequate returns in new energy investments’.