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Last Updated : Aug 13, 2019 01:13 PM IST | Source:

Macquarie, Morgan Stanley upgrade RIL; brokerages see up to 38% upside

Most global brokerage firms maintained their rating on RIL post the AGM. The most aggressive target price was put out by Nomura of Rs 1600 which translates into a rise of nearly 38%.

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RIL CMD Mukesh Ambani
RIL CMD Mukesh Ambani
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Most global brokerage firms maintain their ratings on Reliance Industries, a day after chairman Mukesh Ambani announced mega-deal with Saudi Aramco, a debt reduction plan, partnership with BP and doubling down on consumer business at RIL’s 42nd annual general meeting (AGM) on August 12.

RIL rose by about 9 percent in opening trade on August 13. The stock is still down by about 18 percent from its record high of Rs 1,417 in May.

Also read: As Reliance's debt reduction efforts gain pace, stock may rerate


The global investment bank Namura has been the most aggressive, with a target price of Rs 1,600 that translates into a rise of nearly 38 percent from the closing price of Rs 1,162 on August 9.

The Tokyo-based bank sees the road map for the zero-net debt as a positive. The O2C division may not be demerged soon. Nomura estimates the Aramco deal to be 6 percent EPS dilutive for standalone numbers for FY21.

Macquarie upgraded the stock to outperform and raised its target price to Rs 1,370 from Rs 1,220. The global investment bank sees a 19 percent upside following the stream of bullish news flow at the AGM.

The target reflects Aramco’s premium bid for the refining and chemicals business. It maintains a cautious stance on the free cash flow (FCF) outlook, which remains unchanged.

The Aramco transaction will serve to allay concerns over growing debt. The global investment bank does not see a zero-net debt in its base-case scenario.

Another global investment bank, Morgan Stanley, has upgraded RIL to overweight post the AGM from equal-weight with a target price of Rs 1,349.

It is time to relook at the stock, a Morgan Stanley note said. Cheaper ethane feedstock could drive upside in PE multiple, and faster asset monetisation could surprise the Street.

UBS and CLSA maintain buy rating on RIL, with a target price of Rs 1,500, and 1,530, respectively.

“AGM announcements should dispel fear over leverage. The company sets the stage for the next leap for tech and consumer businesses,” said the CLSA note. The global investment bank said there was a possibility of a re-rating as the reach of technology and consumer businesses was appreciated.

RIL 13 Aug

Disclaimers: The above report is compiled from information available on public platforms. advises users to check with certified experts before taking any investment decisions.

Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.


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First Published on Aug 13, 2019 10:23 am
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