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Here's what global brokerages have to say about RIL's oil-to-chemicals spin-off

Research house Nomura has kept a buy rating for a target of Rs 2,400 per share.

February 24, 2021 / 09:51 AM IST

Reliance Industries (RIL) share price added a percent in early trade on February 24, a day after the company announced that it has initiated the process of carving out its Oil-to-Chemicals (O2C) business into an independent subsidiary.

The company said it will retain 100 percent management control of the subsidiary.

Below is a summary of what some brokerages are saying about the stock and the company after the demerger announcement:

Nomura | Rating: Buy | Target: Rs 2,400

Post O2C demerger, the company’s focus is on green energy. There will be no impact of O2C demerger on consolidated numbers, while the demerger should improve the outlook on stake sale in O2C business, said the brokerage.

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Nomura expects the company’s consolidated EBITDA to grow 62% in FY22 & 28% in FY23 and expect 33% earnings CAGR over FY20-23, reported CNBC-TV18.

Macquarie | Rating: Underperform | Target: Rs 1,350

The company is setting the stage for O2C stake sales. The stock price implies flawless execution on the company’s multi-pronged growth aspirations.

Research firms FY22-23 EPS estimates are 25% below consensus & maintain an underperform rating, reported CNBC-TV18.

UBS | Rating: Neutral | Target: Rs 2,475

The O2C reorganisation is a step closer to value unlocking and monetisation of O2C assets could be on the cards in 2021-22, reported CNBC-TV18.

Morgan Stanley | Rating: Overweight | Target: Rs 2,252

The O2C demerger plan points to the next leg of expansion & clarity on the next investment cycle. It’s a step towards monetisation & acceleration of its new energy & material plans.

The reorganisation will support strategic partnerships & new investors in O2C business and it will have four growth engines- Digital, Retail, New Materials & New Energy.

The research house see significant upside risk to the earnings & multiples for O2C, reported CNBC-TV18.

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At 09:24 hrs, Reliance Industries was quoting at Rs 2,044.40, up Rs 20.95, or 1.04 percent on the BSE.

The share touched a 52-week high of Rs 2,368.80 and a 52-week low of Rs 867.45 on 16 September 2020 and 23 March 2020, respectively.

Currently, it is trading 13.69 percent below its 52-week high and 135.68 percent above its 52-week low.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd that publishes Moneycontrol.com

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Feb 24, 2021 09:44 am

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