International brokerages Bernstein and CLSA maintained their bullish stance on Mukesh Ambani-led Reliance Industries Ltd, citing telecom unit Jio as the key driver of the conglomerate’s growth.
Bernstein retained its ‘outperform’ call, raising its target price on Reliance Industries stock to Rs 3,440, indicating a potential upside of around 15 percent. The brokerage also raised its target price for the Jio business following the telecom operator’s rollout of its cheapest prepaid yet.
Reliance Jio continues to focus on monetisation, recently raising tariffs and completing its 5G rollout. Over the next three years, Jio is expected to report an average annual revenue growth of 16 percent and a 20 percent annual increase in earnings before interest, taxes, depreciation, and amortisation (EBITDA), the brokerage estimated.
As Jio continues to gain market share, it is on track to surpass 500 million subscribers and capture nearly 47 percent of the revenue share by FY25, Bernstein wrote.
CLSA also maintained its outperform call, albeit with a target price of Rs 3,300. The brokerage said Jio’s 5G rollout has led to a 46 percent increase in capital expenditure for FY24, from a year earlier, which has impacted its free cash flow, despite a 15 percent increase in operating cash flow.
The next phase of growth for Jio will come from 5G monetisation and the ramp-up of its broadband services, the brokerage said.
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According to data from TRAI, Reliance Jio added about 19.1 lakh wireless subscribers in June, increasing its mobile user base to about 47.6 crore. In the wireline segment, Reliance Jio outperformed the competition by adding 4.34 lakh new subscribers.
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