RIL shares cross Rs 2,700 mark for first time, Mcap above Rs 18 lakh crore; what's next?

Shares of Mukesh Ambani-led Reliance Industries Ltd (RIL) hit their record high for the second consecutive session on Thursday. RIL shares hit a fresh high of Rs 2,724.95 in trade today against the previous close of Rs 2649.95 on BSE. The stock surpassed the record high of Rs 2658.95 reached on January 10, 2024. Later, the RIL stock ended 2.58% higher at Rs 2718.40 today. 

This is the first time the stock has closed above the Rs 2700 mark. The stock took nearly six months to scale fresh highs after the RIL stock reached a high of Rs 2,635.17 on July 19, 2023. 

The RIL stock fell to its 52-week low of Rs 2012.14 on March 20, 2023.  In the current session, the RIL stock saw high turnover of Rs 92.64 crore on BSE after 3.44 lakh shares changed hands on BSE. RIL stock has risen 16.62% in a year. It has seen low volatility in one year with a beta of 0.3.  
Market cap of Reliance Industries rose to Rs 18.39 lakh crore today against Rs 17.92 lakh crore on  January 10.  

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The stock is overbought on technical charts with its relative strength index (RSI) at 70.6. Reliance Industries shares are trading higher than the 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages, signaling the stock is trading in bullish zone.    

Brokerage ICICIdirect expects the large cap stock to reach Rs 3050 in the medium term.

ICICIdirect said the stock digested multiple headwinds, making a strong base in the vicinity of rising 100-week EMA (Rs 2,235) that is held since 2017 except Covid fall. It believes that the stock is headed towards Rs 3,050 from medium term perspective being measuring implication of March 22-July 23 range added to Rs 2,600.

"The stock has been out of limelight for over two years, as it digested strong rally during 2020-21. It is now poised to conclude this consolidation and expected to lead Nifty in 2024. Structurally, the corrective phase over past two years has retraced preceding 18 month rally by just 38 per cent over past 26 months, indicating robust price structure," the brokerage said.  

Morgan Stanley has assigned a target of Rs 2,821 for the stock. It sees multiple triggers to reverse the past nearly two years of earnings downgrade cycle. In its India Equity Strategy Outlook 2024, the global brokerage added Reliance Industries to its focus list.

The RIL management commentary on "peak net debt" in FY24, funding all of its investments from operating cash flow (OCF), and a slowdown in capex intensity in 2024, all point to increasing focus on de-gearing balance sheet, said  Morgan Stanley.

"Other catalysts that could help de-gear and help the stock catch up with peers on multiples include: potential hive off for warehouses in retail and significant ramp-up in retail revenues esp. grocery; inventory restocking for chemicals in India; tightening in global fuel markets, as China caps domestic refining capacity until 2025; and gas/oil production step up - all key to NAV expansion as net debt unwinds with higher OCF, despite our $17 billion annual investment forecast for the next three years," the brokerage added.

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Jefferies has maintained its BUY stance on the Reliance Industries stock. In its report, Jefferies highlighted the company's favourable valuation while maintaining the rating. Jefferies has assigned a price target of Rs 3,125 on Reliance Industries shares.  

The report sees a robust 13 per cent EBITDA growth for Reliance Industries in FY25. The report said that Jio, a telecom subsidiary of Reliance Industries, could contribute two-thirds of the company's share, driven by an expected tariff hike.  

Jefferies added that it expects a fall in capital expenditure for Jio and the retail segment in FY25, a factor that is seen as instrumental in improving free cash flow and mitigating concerns surrounding a potential increase in net debt.  

Shiju Koothupalakkal, Technical Research Analyst, Prabhudas Lilladher has assigned a target price of Rs 2,730-Rs 2,850 maintaining a hold stance on the large cap stock. One can fix a stop loss of Rs 2,470.

"Reliance Industries has gained quite significantly in the last two months after the descending channel breakout. At present, it has almost reached the previous peak zone of Rs 2,630 level, where it can find some resistance. The near-term support would be maintained near Rs 2,470 zone and only a decisive breach below this zone shall weaken the overall bias. At the same time, a decisive breach above the previous peak zone of Rs 2,630 should trigger a breakout for fresh targets of Rs 2,730 and Rs 2,850 levels, respectively, in the medium-term time frame," said Koothupalakkal.

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