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Domestic brokerage firm Nuvama Institutional Equities has a price target of ₹3,786 per share on Reliance, which implies a potential upside of 24% from Thursday’s closing levels.
This ₹3,786 price target is the highest for Reliance Industries on the Street.
The Mukesh Ambani-owned oil-to-telecom-to-retail conglomerate highlighted at its AGM a potential 50%-plus addition to earnings in five to seven years from the new energy business, strong digital and retail outlook and huge oil-to-chemicals (O2C) expansion.
The board will also decide on a 1:1 proposed bonus issue on September 5.
Key highlights from the 47th AGM include the potential for new energy business equalling current O2C profitability in the next five to seven years, which Nuvama estimates could add over 50% to consolidated profit and significantly increase value, particularly due to clean energy initiatives.
O2C is Reliance’s largest profit base currently, contributing towards two-fifths of EBIDTA and more than half of attributable profit.
Additionally, the retail and digital EBITDA are expected to double by the financial year 2028, with Reliance’s overall business projected to grow more than two times by 2030E.
RIL’s strong guidance for digital, retail, and huge petchem capacity is expected to drive fresh growth.
“RIL’s new energy rollout shall not only add 50%-plus to PAT but also re-rate valuations, including the O2C business given its net zero-carbon target by 2035,” the brokerage noted.
The AGM also highlighted Reliance’s makeover into a deep tech and new-age manufacturing entity, with Jio leading the AI charge and being embedded in every segment.
“However, a key notable was the chairman indicating new energy becoming as big and profitable as O2C over the coming 5-7 years i.e. over ₹60,000 crore EBITDA by FY31 and projects being CF-positive from Day-1). Besides the progressive start of giga-factories starting end-FY25, RIL has leased land for generating 150BU of power in Kutch, started building its own transmission infra, and secured sites at Kandla Port for green H₂/derivative logistics,” Emkay Global said in a note.
While execution is the key, Emkay believes that the new energy segment earnings would contribute meaningfully from FY28 onwards, as it maintained a positive stance on Reliance with a target price of ₹3,335.
Global brokerage house Nomura has maintained a ‘Buy’ recommendation on Reliance Industries, with a target price ₹3,600 per share.
Nomura said the company will double in the next 5-7 years, adding that the launch of Jio Brain and Jio Cloud will lead the AI integration journey.
The brokerage sees robust growth across segments driving a three-year EBITDA CAGR of 13%, which will further be boosted by a sharp increase in free cash flow generation and a sharp decline in net debt levels.
Out of the 36 analysts that have coverage on Reliance Industries, 25 of them have a ‘Buy’ recommendation, eight of them say ‘Hold’, while three have a ‘Sell’ rating on the stock.
Shares of Reliance Industries Ltd. climbed over a percent higher to hit a day’s high of ₹3,079.45. The stock has gained 17% so far in 2024.
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