Here's why analysts see more steam in RIL shares despite over 9% rise in 3 days

Energy-to-telecom behemoth Reliance Industries (RIL) has surged over 9 per cent in three straight sessions to hit an all-time high of Rs 2,788.80 on Thursday. However, shares of the company closed at Rs 2,782.15 on April 21 against Rs 2,544.15 on April 18. The benchmark BSE Sensex gained 1.30 per cent to around 57,912 during the past three trading sessions.

Market watchers believe that substantial numbers of improving gross refining margin (GRM) in the recently ended March quarter, hopes of strong quarterly results due to strengthening crude oil prices, expectations of a rise in Arpu for Reliance Jio and recent announcement to foray into green energy have aided sentiment. They also project that shares of RIL may cross Rs 3,000 in the next few quarters.

Ravi Singhal, vice chairman, GCL Securities said, “Crude oil prices have remained positive throughout the March quarter. Hence, the market is expecting a big improvement in GRM leading to strong Q4 results. So, bulls have been pumping money in RIL shares.” The company is yet to announce its March quarter results.

Brokerage ICICI Securities projected that Reliance Industries may post 64.60 per cent year-on-year (YoY) growth in profit after tax and a 66.30 per cent rise in EBITDA. It also sees a 36.80 per cent rise in revenue for RIL in the March quarter.

B&K Securities said it expects strong Q4FY22 results for upstream companies and Reliance Industries.

“We are building in for EBITDA and adjusted PAT to 45 per cent and 49 per cent, respectively, driven by strong performance at the O2C division, mainly higher refining margin QoQ partially offset by weaker petchem performance amid higher feedstock costs. Telecom segment profitability should improve on the back of subscriber additions and tariff hikes taken in Q3FY22. Retail earnings are expected to remain strong in Q4FY22.”

Commenting on the further price movement of RIL shares, Ravi Singh, vice president and head of research, ShareIndia, added that the company is trending high after the firm sought to be the world’s top blue hydrogen maker.

Earlier in February, the firm said it will re-purpose the Rs 30,000 crore plant that currently converts petroleum coke into synthesis gas for producing blue hydrogen at $1.2-1.5 a kilogram.

“This new energy business will boost the net asset value of the company. RIL stock price may touch the levels of Rs 3,000 from the current price, in the near term,” Singh said.

Global brokerage firm Morgan Stanley has set the price target of Rs 3,253 for RIL, indicating an upside of nearly 17 per cent from the current market price.

“RIL’s hydrogen push will the lower operating costs medium term, while also advancing its net carbon-zero target,” Morgan Stanley said adding the value-creation potential from the global pivot on energy security and the energy transition remains highly underappreciated for RIL.

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