India's most valued firm Reliance crosses Rs 19 trillion in market cap

With refining margins hitting new peaks and likely to find support at elevated levels, analysts expect consensus earnings upgrades for FY23, with potential spill-over into FY24.

"While there are offsets to realised margins for refiners, RIL should still be a significant net beneficiary in the current environment, given its high diesel yield, high complexity, and high export ratio. For the three Indian OMCs (oil marketing companies) better refining is likely to be offset by weaker marketing due to retail pass-through delays which should also make RIL more attractive from a domestic flow perspective," said CitiGroup in its recent note. The brokerage has raised FY23-24 EBITDA by three to nine percent, and increased its target price to Rs 3,170 a share from Rs 2,750. It upgraded the stock to buy.

Analysts say that the coming fourth quarter results may not see any major benefits in O2C due to petrochem weakness. However, from the first quarter of FY23 earnings will start capturing the benefit of the prevailing refining margin strength.  Any stock correction should, therefore, provide an enhanced buying opportunity, analysts added.

Recently brokerage firm Morgan Stanley said it sees shares rising 50 percent from their closing price over the next 12 months in its best-case scenario for the company as it believes that the market is yet to assign any value to new green energy initiatives.

The brokerage believes the share price implies near-zero value for the new energy business and no upside from net asset value accretion in the traditional energy business.

In its bull case, Morgan Stanley has set a price target of Rs 3,975 per share on the condition that the refining business margins remain elevated and more clarity emerges on its green energy investments.

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