After billionaire Mukesh Ambani-led conglomerate Reliance Industries (RIL) reported largely in-line earnings for the March quarter, driven by an improvement in O2C throughput, brokerages have increased target prices amid positive comments from the management around capex moderation and hints of potential telecom tariff hikes.
RIL shares, which have gained around 14% in the calendar year so far, were trading flat in Tuesday\’s morning trade but brokerages have increased their targets going up to Rs 3,500-mark.
Global brokerage firm Jefferies has hiked its target price on RIL to Rs 3,380 from Rs 3,140 saying that it expects 14% EBITDA growth in FY25 with Jio contributing lion\’s share on the back of a tariff hike.
UBS, which has given a target price of Rs 3,420 on RIL, said it expects near-term sales growth in the retail business to be driven by higher sales per square feet from stores added in the last 2 years.
Macquarie has maintained a neutral stance on RIL but raised the target price from Rs 2,560 to Rs 2,630 while Morgan Stanley has maintained an overweight stance with a target price of Rs 3,046.
BoFA has a target price of Rs 3,250 and Bernstein Rs 3,160.
Domestic brokerage Nuvama has given the highest target price of Rs 3,500 saying that RIL\’s new energy rollout shall unleash its next leg of growth besides aiding conventional business.
Reliance Retail grew merely 11% year-on-year (YoY) – the weakest in the last three years – owing to store rationalisation and a higher base.
\”Continued slowdown in discretionary spending only made matters worse. Nevertheless, the company maintained healthy operating margins of 7.4% during the quarter. While we expect the near-term weakness to persist, Reliance Retail has huge potential to tap the India retail market. We expect the company to deliver a revenue/EBITDA CAGR of 13/16% over FY24-FY27E,\” Equirus Securities said.
Analysts also note that concerns on debt are overdone as RIL\’s net debt is expected to decline gradually as capex will not only moderate but will also be fully funded by a gradual increase in internal cash generation.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
