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RIL share price rises over 3% as Goldman Sachs, HDFC Securities turn upbeat on D-Street heavyweight

Share price of RIL surged 3.34% intra day to Rs 1187 compared to the previous close of Rs 1,150 on BSE

twitter-logoBusinessToday.In | April 16, 2020 | Updated 18:36 IST
RIL share price rises over 3% as Goldman Sachs, HDFC Securities turn upbeat on D-Street heavyweight
Share price of Reliance Industries, which runs the world's biggest refining complex at Jamnagar in Gujarat, has gained after 2 days of consecutive fall

Reliance Industries Ltd (RIL) share price closed higher today after Goldman Sachs and HDFC Securities  went upbeat on growth prospects of the stock. Share price of RIL surged 3.34% intra day to Rs 1187 compared to the previous close of Rs 1,150 on BSE. It closed 1.62% or 18.65 points higher at Rs 1,168.

Share price of Reliance Industries, which runs the world's biggest refining complex at Jamnagar in Gujarat, has gained after 2 days of consecutive fall. The stock trades higher than 20 day moving averages but lower than 5 day, 50 day, 100 day and 200 day moving averages. It has gained 15.11% in last one month.

The large cap stock has fallen 13.13%  during last one year and lost 22.81% since the beginning of this year.

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On December 20 last year, the stock had hit its 52-week high of Rs 1,617 on BSE.  It touched fresh 52-week low of Rs 875 on March 23 this year.

Total 5.92 lakh RIL shares amounting to turnover of Rs 69.49 crore changed hands on BSE. Market cap of the RIL stood at Rs 7.40 lakh crore on BSE.

Goldman Sachs sees 34 per cent upside in the stock from the current level.

"We expect a rapid recovery for RIL's earnings driven by 60 per cent Ebitda (earnings before interest taxes depreciation and amortisation) growth for the telecom business in FY21 on account of higher ARPU (average revenue per user), recovery in oil prices and refining margins as supply demand trends improve in 2HFY21 (October-March), and turnaround in the retail business once lockdown restrictions are lifted," said Goldman Sachs.

The brokerage has maintained a buy call on RIL, but cut its target price by 2 per cent to Rs 1,550, on account of potential delay tariff hike by Jio on account of Coronavirus outbreak.

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On the other hand, HDFC Securities sees 18% upside in the stock to Rs 1,400 from the current level.

"RIL stock has corrected by 25% from its peak over the past 4 months driven by global economic slowdown concerns. Our view that the stock price correction is overdone, and the stock should outperform, is premised on 1) Non-cyclical domestic consumer business accounting for 56% of FY21E EBITDA (31% in FY19), 2) The stock factoring only an $3.0/bbl FY21E refining margin, 49% lower than Global Financial Crises (GFC) quarterly trough and 3) Interest Coverage ratio of 4.3 times and Net Debt/EBITDA of 1.6 times in FY22E (12-35% better than the FY19 lows)."

 By Aseem Thapliyal

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