New Delhi: Shares of
extended the rally, climbing 5 per cent on Monday as an upbeat report by Jefferies bolstered the confidence in oil-to-telecom behemoth among investors. The counter had gained 6 per cent on Friday.
In its report, Jefferies expects 50 per cent upside in the refiner’s petchem Ebitda, if the prevailing momentum sustains. The brokerage added that sustained strong performance by the petrochemical vertical will improve the likelihood of O2C business stake sale in FY22.
The oil-to-telecom company is led by the richest Indian, Mukesh Ambani, and has been rangebound since February. Shares of Reliance Industries have gained 11 per cent in the previous two sessions to Rs ,2191.50 on Monday. However, the counter is still 13 per cent off from its 52-week hit during September 2020.
The foreign brokerage has set the base target of the stock at Rs 2,580 level and suggested an upside scenario target of Rs 3,150, which would mean a 50 per cent upside from Friday’s closing price.
Other market veterans, too, have expressed their bullish views on the largest domestic company by market capitalization. In an interview to ET Now, Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services, said that Reliance’s retail and telecom segments had plateaued in terms of growth.
“From now, the expectation is that the core oil-to-chemicals segment should start performing and that should drive the stock from here,” he said. “The global demand has been pretty good. Oil prices have been stabilising around $60 per barrel, which is positive for oil producers,” he added.
Despite a prolonged underperformance, market advisor Sandip Sabharwal is not weighing much on the counter as he finds nothing new in some uptick in the petrochemical margins.
“Reliance is moving just because of its traditional businesses. Nobody is talking about the new generation businesses because no one seems to be figuring out what Jio Platforms is doing besides the small e-commerce venture, which is somewhat stillborn and the telecom business,” he said.
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