What will decide the future of RIL stock? Ambani’s speech at Reliance AGM were filled with hints

A day after Reliance Industries (RIL) made significant announcements as part of its annual general meeting, the analyst community has reiterated its positive outlook on the country’s largest listed entity while highlighting the fact that the company is focusing both on the new age – digital and retail – as well as the old segment – petrochemical. 

Here’s what some of the leading global broking firms had to say about RIL today. 

Morgan Stanley 

“While RIL’s plans to grow have been well flagged, it announced plans to more than double its value by 2027 that were bigger, faster and also more global than anticipated. Human capital and leadership focus stood out. Overall, the AGM points to another inflection in strategy,” stated a report released today. 

The global financial major has an overweight rating on the stock with a target price of Rs 3,015. 

Further, according to Morgan Stanley, factors like tightening global refining and chemical markets, rising market share & reduced competitive intensity in telecom industry and partnerships in new energy business are the key risks to upside. 

Jefferies 

“The AGM laid out the succession blueprint along expected lines and new phase of capex on new growth platforms,” said a report by Jefferies that has a buy rating on RIL with a base case target price of Rs 2,980. 

The global firm has highlighted factors like sustainable competitive advantage on scale economics, cost leadership, financial strength and interesting options with likely financial services foray and partnerships with global firms like Facebook and Google to support its investment thesis. 

Interestingly, Jefferies has a target price of Rs 3,400 if in case the retail arm is able to gain market share faster than expected, recovery in gross refining margin (GRM) is ahead if estimates and possible listing of Jio among other things 

HSBC 

“We believe adoption of 5G, retail growth pick-up and success in gradual rollout of new energy will drive stock performance,” said HSBC. 

“We continue to like RIL’s business and balance sheet and believe all three of its core businesses – O2C, retail and digital services – have become self-sustaining and cash-generating, with retail and digital growing strongly,” it added. 

HSBC has a target price on sum-of-the-parts basis of ₹2,620 with a hold rating on RIL. It lists lower O2C margins than currently forecasted and a slow uptick as key downside risks while the key upside risks include breakthrough technology for new energy initiatives. 

Sharekhan by BNP Paribas 

“RIL AGM made three important announcements – 1) succession plan for the respective business of Jio, retail, and new energy, 2) capex plan (Rs. 2 lakh crore for 5G and Rs. 75,000 crore each for O2C and new energy), and 3) plan to launch the FMCG business to augment retail business growth,” said a report by Sharekhan by BNP Paribas. 

“In our view, the clear succession plan for each business is important for building a leadership team for sustained growth (RIL targets to double its value by the end of 2027). Moreover, launch of Jio 5G service and FMCG would be the next leg of growth for the consumer centric business, while new energy investment is a long-term vision to diversify earnings stream,” it added while maintaining a buy rating on RIL with a target price of Rs 3,050. 

Also read: Mukesh Ambani handover plan: Jio to Akash, Retail to Isha, new energy biz to Anant

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