Reliance Industries (RIL), the largest listed Indian company, was among the top gainers in the benchmark indices in Friday's trade, supporting the market. Shares of the oil-to-telecom-to-retail giant are in focus ahead of the much-awaited annual general meeting (AGM) of the company, due next week on Thursday, August 29.
Brokerage firms, both domestic and global, continue to remain positive on the stock of Reliance Industries Ltd, with some pushing up their target prices on the counter ahead of the AGM, where they anticipate some major announcements related to the demerger or separate listings of telecom and/or retail business.
Bernstein remains positive on the index heavyweight on the back of the growth engine led by Reliance Jio. It has increased its target price of RIL on the back of higher valuations following recent tariff hikes by the telecom arm, which were ahead of earlier expectations and the completion of its 5G rollout.
The brokerage expects a 16 per cent compound annual growth rate (CAGR) in revenue and a 20 per cent CAGR in Ebitda for Jio over the next three years, with the benefits of the tariff hike reflecting in the financial year 2025, said Bernstein.
"Retail focus has been on operational efficiency as capex moderated and stores were rationalized. Oil-to-chemicals earnings remained steady. Timelines for commencement of new energy products and potential listings of Jio and Reliance Retail will be key things to focus on," added Bernstein with revised target price of Rs 3,440, from Rs 3,190 earlier.
Shares of Reliance Industries rose about a per cent to Rs 3,022.65 on Friday, with its total market capitalization nearing Rs 20.5 lakh crore mark. The stock has gained about 17 per cent in 2024 so far.
The next leg of growth is expected to come from 5G monetisation and broadband ramp-up, said CLSA, which has maintained its 'Outperform' recommendation on Reliance Industries with a price target of Rs 3,300 per share.
Other analysts believe that roadmaps and plans on new energy business, debt status, capital expenditure plans will be focused, besides demerger plans for retail and/or telecom business in the AGM. The FY24 annual report states that the company will continue to monitor financial markets to seize suitable opportunities for capital raising to support its growth plans.
RIL emphasised its new energy business roadmap and reported rapid progress in setting up of 5 Giga factories to achieve Net Carbon Zero by 2035. On the O2C business, it highlighted that petrochem margin weakness continues on huge capacity addition amidst muted demand but refining margin remains robust on steady global oil demand growth, said JM Financial.
As far as its digital business is concerned, RIL restated that rollout of its 5G services panIndia via standalone architecture gives it an edge over peers. Jio’s pan-India rollout of JioAirFiber has expanded the addressable market and, hence, it reiterated its 10 crore target. It once again emphasised that the JioBharat phone is likely to make India ‘2G-mukt’, said the brokerage.
Digital business capex was at Rs 57,400 crore in FY24 taking cumulative investment to $86 billion. It restated its focus on expanding consumer brands and strengthening Digital/New Commerce capabilities, it added with a 'buy' tag and a target price of Rs 3,500. "We believe peak capex/net-debt is behind us, and RIL has industry leading capabilities across businesses," JM said.
Helmed by Mukesh Ambani, Reliance Industries reported a 5 per cent decline in its consolidated net profit for the first quarter ending June 2024 to Rs 15,138 crore. Despite a 12 per cent year-on-year increase in revenue from operations to Rs 2.36 lakh crore, the bottomline fell short of market expectations.
The dividend of 100 per cent of Rs 10 on each stock of Re 10 face value will be paid to investors only if approved by the members at the upcoming AGM. The company had fixed August 19 as the record date for the proposed dividend for the financial year 2023-24 of the company.