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Synopsis: Following Reliance Industries Limited (RIL)'s Q1 results, analysts project potential upside of up to 22% for its stock, driven by growth in its New Energy initiative and conventional businesses. Analysts have adjusted their earnings estimates and target prices, emphasizing upcoming catalysts like the Reliance Jio IPO and developments in the New Energy sector.
Mumbai, July 22, 2024: Reliance Industries Limited (RIL) has garnered bullish sentiments from analysts post its Q1 FY25 earnings, with several firms revising their target prices upwards amid optimism about the company's future prospects.
Analysts from various financial institutions have highlighted RIL's strategic initiatives and sectoral outlook as key drivers for the stock's potential growth. Nuvama, for instance, has raised its target price for RIL to Rs 3,786, citing the anticipated rollout of RIL’s New Energy segment and robust performance across its conventional businesses. The firm emphasized the transformative potential of these initiatives as it extended its valuation estimates to September 2026.
The impending Reliance Jio IPO and anticipated upcycle in refining and petrochemical sectors for FY26-27 are viewed as pivotal catalysts for RIL's stock by industry experts. They anticipate these developments, coupled with the upcoming Annual General Meeting (AGM) and advancements in New Energy operations, to bolster investor confidence and drive further appreciation in RIL's share price.
Financial Adjustments and Market Outlook
Nomura India and Emkay Global both adjusted their earnings projections for RIL, albeit slightly reducing FY25 and FY26 Ebitda estimates by 2-3%. Despite this adjustment, Nomura reiterated its 'Buy' rating on RIL, setting a revised target price of Rs 3,600, reflecting confidence in the company's long-term growth trajectory. Emkay Global, on the other hand, set a target of Rs 3,335 per share, underscoring the importance of vertical monetization and advancements in New Energy for future valuation triggers.
Meanwhile, MOFSL expressed bullish sentiments towards RIL's refining and telecom sectors, anticipating sustained growth in these segments. The firm highlighted the potential for the Reliance Jio IPO to unlock further value in RIL's telecom business, while also forecasting robust revenue and Ebitda growth in its retail division.
Analyst Insights and Sectoral Performance
"RIL remains our top pick in the sector," affirmed Nomura, emphasizing the optimistic outlook across RIL's diverse business segments. The firm highlighted the potential for improved free cash flow (FCF) generation and return ratios, driven by strategic initiatives in retail expansion, digital commerce, and telecom tariff adjustments.
As market dynamics evolve, analysts continue to monitor global oil demand trends and product market conditions, factors expected to benefit RIL’s Oil-to-Chemicals (O2C) business. Positive developments in petrochemical margins and upstream operations further bolster RIL's overall financial outlook for FY25.
Disclaimer: This article is based on publicly available information and market analysis. Investors are advised to conduct further research and consult with financial advisors before making investment decisions.
