Jefferies has given
A target price of Rs 2,950 indicates an upside potential of over 14 per cent for the stock. On Wednesday, the stock was down 2 per cent at Rs 2,528.
The global research firm believes that a correction in the stock provides an opportunity to buy over the counter and there are tailwinds for refining margins in CY22.
“Multi-year low inventories, declining Russian exports and declining exports from China, as well as low diesel production in Europe are major tailwinds for 2022,” Jefferies said.
The brokerage believes that Reliance Energy is a major beneficiary of inflation and every $1 improvement in its annual refining margin will add about $400-450 billion to its consolidated EBITDA.
“Our initial estimates suggest that RIL’s oil-to-chemical business EBITDA may grow 60 percent in Q1 this year and 35 percent of our FY23 estimate.” “The consensus should be to increase FY23 earnings as a result of continued strength in refining.”
Reliance’s shares have fallen nearly 10 per cent from their recent peak, while they have given modest gains so far in 2022.
A week ago, JP Morgan, another global brokerage firm, upgraded Reliance Industries from ‘neutral’ to ‘overweight’ with a target price of Rs 3,170.
The brokerage firm had said that given the strong refining and gas environment, RIL is one of the few large companies in India with a positive earnings revision cycle.
“The improved earnings outlook of the refining and upstream gas business and a strong hold of valuations for the non-energy or consumer business are key factors responsible for the upgrade,” the report said.
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