RIL stock had a decent rally of 12 per cent in the last one month. But now the stock price could remain under pressure in the near-term, said a brokerage. 
Special 
RIL stock had a decent rally of 12 per cent in the last one month. But now the stock price could remain under pressure in the near-term, said a brokerage. Reliance Industries Ltd (RIL) may have limited upside potential post the recent run-up -- at least in the near term, as a few brokerages downgraded the stock to 'Hold' post in-line June quarter results and demerger of Jio Financial Services (JFS). RIL posted a slight 2 per cent miss on consolidated Q1FY24 Ebitda mainly on oil-to-chemicals (O2C) segment weakness, partly offset by the 2-4 per cent beat each in Reliance Retail and upstream business, with Reliance Jio's numbers being in-line, said Emkay Global.
"But due to the recent stock run-up (with the JFS demerger) and rangebound business outlook, we downgrade RIL to Hold. We are constructive on earnings growth; any positive trigger with respect to further vertical monetisation, new energy and Jio tariff hikes could rerate the stock," Emkay said while suggesting a target of Rs 2,660 on the stock.
Systematix Institutional Equities said RIL’s June quarter revenue and Ebitda were in line with expectations while profit after tax was slightly above estimates due to higher-than-expected other income. This brokerage has cut its target price to Rs 2,550 from earlier Rs 2,766 largely reflecting exclusion of Jio Financial Services (JFSL). The stock is trading at an EV/Ebitda of 10.8 times and PER of 22.7 times on FY25E.
"We downgrade the stock to HOLD from earlier 'BUY' due to limited upside after the recent run-up," it said.
B&K Securities said the RIL stock had a decent rally of 12 per cent in the last one month based on de-merger of financial services business. But now the stock price could remain under pressure in the near-term as O2C Ebitda run-rate at Rs 15,000-16,000 crore is unsustainable as refining margins have normalised lower. "O2C volume
is already close to peak and as such, there remains limited space for positive surprise. Besides, Q1 telecom ARPU at Rs 180.50 was lower than Street’s expectation and between Q1FY23-Q1FY24, ARPU has risen by mere Rs 5, whereas Street is building in 8-10 per cent increase in ARPU in FY24F (Rs 15-20)," it said while suggesting a target of Rs 2,841 on the stock.
Macquarie sees the stock at Rs 2,100. Citi has suggested a target of Rs 2,750 on the stock. Jefferies finds the stock worth Rs 2,935 level.
For the June quarter, the oil-to-telecom major reported a consolidated net profit of Rs 18,258 crore, down 6.09 per cent year-on-year (YoY) from Rs 19,443 crore in the corresponding quarter last year. Profit (attributable to the owners) came in at Rs 16,011 crore against Rs 17,955 crore, down 10.82 per cent YoY. Analysts were largely expecting profit to fall anywhere between 8 per cent and 17 per cent.
The Mukesh Ambani-led company said its consolidated revenue from operations declined 5.31 per cent YoY to Rs 2,10,831 crore from Rs 2,22,664 crore in the same quarter last year. Analysts were expecting a 2-8 per cent YoY drop in sales for the Mumbai-headquartered company.
A few brokerages, however, maintained their faith on the stock and suggesting targets that suggest 15-20 per cent potential upside.
"We value the refining and petrochemical segments at 7.5 times EV/Ebitda, arriving at a valuation of Rs 904 per share for the standalone business. We ascribe an equity valuation of Rs 750 per share to RJio and Rs 1,500 per share to Reliance Retail, factoring in the recent stake sale. We have further included an equity valuation of Rs 16 per share pertaining to New energy on book value. Our target is adjusted for Jio Financial Services (JFS) valuation. We reiterate our BUY rating with a target of Rs 2,935," said Motilal Oswal Securities.
Sharekhan maintained its 'Buy' rating on RIL as it "firmly believes" that it is compelling long term investment bet given strong prospects across business and potential value unlocking from retail, digital services, and financial services portfolio.
"O2C shall remain weak in the near-term led by weak GRMs and low petchem demand offset by low ethane prices. We reiterate ‘Golden refining Era’ highlighting over $10 GRMs from CY24. Upstream to parallel retail’s FY24E EBITDA as KG-D6 production ramps-up. New energy venture is now gaining traction (execution underway) New energy (upgrade) plan for Green-H2 shall re-rate valuation besides huge synergies with O2C. Revise target price to Rs 3,088 (strip off JFS Rs 117)," it said.
Copyright©2025 Living Media India Limited. For reprint rights: Syndications Today
