Reliance share valuation ‘favourable’ after correction, Jefferies raises price to Rs 2,950

The brokerage house has maintained a buy rating on the stock and increased its target price to Rs 2950 a share, up 22 percent from current market price.

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Brokerage firm Jefferies India sees the valuation of the Reliance Industries Ltd stock as ‘favourable’ after a 7.5 percent decline in price from its record high, but cautioned that the strong global refining margins might not last.

Jefferies has maintained a ‘buy’ rating on the stock and has raised the target price to Rs 2,950 a share, up 22 percent from current market price.

The report suggests that the robust refining margins help protect against potential downside risks to the Street estimate for Reliance’s oil-to-chemical business EBITDA.

The brokerage house pointed out that the reintroduction of export duty on refined products will cap the margin growth at roughly 25 percent of Reliance’s refining output. Additionally, they expect reduced capital intensity in Reliance Jio and Reliance Retail by FY25, leading to robust free cash flow.

On the upside scenario, the brokerage sets a target price of Rs 3,300 per share, marking a 37 percent increase from the current valuation. This optimistic target is based on the likely tariff hike by Jio and the possibility its listing that will boost valuations, wider market share gains by Reliance Retail at an accelerated pace, and Jiomart’s GMV surpassing the expectations with the festive season coming close.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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