RIL stock jumps 3%, adds Rs 1.15L cr m-cap in 3 days; time to buy Reliance shares?

Reliance Industries Ltd (RIL) on Friday rose for the third consecutive trading session, adding over Rs 1,00,000 crore to its market capitalisation (m-cap) in the process, as investors judged the recent correction as unjustified. A host of brokerages have come out with positive views and suggested targets in the range of Rs 1,400-1,600 for the most-valued stock on Dalal Street.

The RIL stock rose 3 per cent in Friday's trade and over 7 per cent in three sessions to Rs 1,244.85 level. In the process, its m-cap jumped Rs 1,15,431.14 crore to Rs 16,87,487 crore from Rs 15,72,056 crore on March 4. Yet, the stock is down 16 per cent in the past one year.

Despite steady December quarter results, the RIL stock was hit amid weak market conditions, accentuated by trade war threats. Though the petchem cycle, particularly, can be impacted by the trade wars, it has been muted for quite some time now, Emkay Global said.

"With refined oil and petchem import duties broadly tracking within a reasonable 0-5 per cent and 5-10 per cent range, respectively, RIL’s own petroleum exports to the US not being more than 5 per cent (with further trans-shipments) and 1.5mmtpa of ethane imports from the US by RIL, US tariff risk for the company’s O2C business is low," Emkay Global.

Kotak Institutional Equities said the RIL stock has significantly corrected -- 22 per cent in 12 months, mainly due to weak performance at Retail. It expects store-rationalization cycle to end soon.

"News flows on telecom business IPO timelines (and likely another tariff hike before that) can be a catalyst. Upgrade to BUY from ADD with an FV of Rs1,400 (Rs 1,435 earlier)," it said.

Jefferies retained its 'Buy' on RIL and fixed a target price of Rs 1,600. "RIL's underperformance to Nifty is due to a slowdown in Retail and subdued earnings in O2C and pessimism seems extreme with current marketcap implying $ 48 billion EV for Retail versus $ 106 billion in the last funding round," it said.

Emkay Global noted that FY25 has been slow (2 per cent expected Ebitda growth), impacted by O2C declining 10-15 per cent, Retail slowing to under 10 per cent from 25-30 per cent in FY24, and upstream normalizing from the sharp ramp-ups in earlier years.

"We hence take a conservative view on businesses carrying some uncertainty, namely Jio and Upstream, along with adjustments in the ‘below Ebitda’ line items, we cut RIL’s FY25-27 EPS by 6-13 per cent. Retail is however now set to retrace its double-digit growth trajectory in our view. Mar-26E target is down 8 per cent to Rs 1,450," it said.

Emkay said despite its conservative assumptions, RIL may see still se 10 per cent APAT CAGR during FY25-27E, with upside risks in O2C as well as Jio.