International and domestic brokerages reiterated their bullishness on diversified conglomerate Reliance Industries Ltd (RIL), as the annual report offered fresh insights into the firm's operations, adding to the optimistic sentiment.
Telecom
On the telecom front, international brokerage Macquarie suggested that Reliance Jio’s shift towards prioritising value over sheer subscriber volumes is expected to deliver stronger EBITDA growth compared to Bharti Airtel, driven by higher ARPU and operating leverage.
As a result, the brokerage raised its target price on Reliance Industries to Rs 1,650 per share with an 'outperform' call. The brokerage also rated Bharti Airtel as 'outperform', with a target of Rs 2,050 per share. Both Jio and Bharti are expected to see moderation in capital expenditure intensity going forward, further supporting margin expansion.
Consumption
Global broking house Jefferies noted that RIL has formally begun its push into the fast-moving consumer goods (FMCG) space with the creation of Reliance Consumer Products Ltd. (RCPL). The unit, which will eventually be carved out under the same shareholding structure as Reliance Retail Ventures, has already built a distribution network spanning one million outlets.
While the ambition to become a full-fledged FMCG player is clear, Jefferies noted that Reliance Industries' success on the same will depend on strong execution, as a result of the strong positioning of incumbent players and the rapid growth of startups in the sector.
New Energy
According to domestic financial services player, ICICI Securities, Reliance Industries' New Energy arm will be the key focus area for investments over next few years. Reliance Industries has given details regarding the intended structure of the integrated new energy business and the timelines for achieving the desired scale.
RIL plans to go from sand to solar modules and establish world-scale battery storage solutions to provide round the clock renewable energy (RTC-RE) for its own use and external sales. "This will also power green hydrogen production (electrolysers also in place) which will in turn be sold/used
further to produce green chemicals (methanol/ammonia) along with CBG (compressed biogas) to produce sustainable aviation fuel as well," added the brokerage.
According to ICICI Securities, faster-than-estimated execution on green energy plans will provide a strong upside to RIL. "We believe RIL may continue to outperform depending on the successful unlocking of value from retail/digital services segments, with core business cashflow conversion, return ratios and relatively higher multiples limiting gains as of now," it stated.
Further, the Reliance Industries' 48th Annual General Meeting (AGM) is scheduled for tomorrow, Friday, August 29. Investors, experts, and analysts will be closely watching for further cues and triggers.
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