With the earnings trajectory expected to climb over the next 12 months, supported by strong refining margins, telecom tariff hikes and retail market share gains, Reliance Industries (RIL) stock is gaining steadily. In the last two sessions alone, it is up 7% and is getting closer to its lifetime high of Rs 2,731.50 which it reached in October last year. On Wednesday, RIL stock closed at Rs 2,718.4, a gain of 3.03%.
The conglomerate’s revenue for the current year is expected to be close to Rs 7.5 trillion, a big jump from Rs 4.66 trillion reported in FY22. Corporate profits are estimated at Rs 1.5 trillion while net profit could exceed Rs 60,000 crore as compared to FY22’s Rs 49,128 crore.
Analysts at JP Morgan recently noted that the surge in diesel cracking would boost refining profits for the company while offsetting weaknesses in the petrochemical sector. Goldman Sachs wrote that tailwinds for refining should continue given improved supply, shutdown and jet fuel demand, lower Chinese exports, low inventories and also supply disruption. “We forecast GRM to improve from $9.0/barrel in FY22E to $14.3/11.0 per barrel in FY23/24E, at a premium over the industry’s GRM,” the company’s analyst noted.
The brokerage estimates strong 35% compound growth in earnings over FY21-24 and has a 12-month price target of Rs 3,200 per share.
Morgan Stanley believes the 5G spectrum auction recommendations announced by the telecoms regulator would lead to lower spectrum costs and easier deployment obligations, reducing the need for RIL to overuse. “The 30-50% lower spectrum price for 5G and other bands is positive, although some of it was expected,” brokerage analysts said.
Reliance Retail’s operating performance improved in Q3FY22 as the economy opened up and nearly all stores were operational. The company is expected to gain momentum as the company expands its presence and adds brands.
Shares of RIL have gained 14.8% so far in 2022 against the Sensex’s drop of 2.1%. The stock has generated positive returns every year since 2015. Veteran investor Deven Choksey believes investors are rallying RIL shares ahead of Q4FY22 quarterly results. good numbers and announcements.