Shares of Reliance Industries (RIL) seem to be on a record breaking spree as investors lap up the stock believing in its growth story, thanks to the visible progress on the front of Reliance Aramco deal, rapidly increasing digital footprint of Reliance Jio, healthy growth prospects of Reliance Retail and the company's plans regarding the renewable energy business.
On September 6, the stock climbed 4 percent to hit its fresh record high of Rs 2,479.85 on BSE, jumping as much as 25 percnet year-to-date (YTD). Such a strong gain in a heavyweight like Reliance Industries is a huge thing and indicates strong optimism regarding the company's growth prospects, experts point out.
The stock made a fresh peak of September 6 after its subsidiary Reliance Strategic Business Ventures (RSBVL) acquired 2,28,42,654 equity shares of Rs 10 each of Strand Life Sciences for a cash consideration of Rs 393 crore.
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A further investment of up to Rs 160 crore is expected to be completed by March 2023, RIL said in a regulatory filing and added that the total investment will translate into 80.3 percent of equity share capital in Strand on a fully diluted basis.
More steam left
The rally in the stock is not done yet, experts point out as the fundamental outlook of the stock suggests it may go further.
"Reliance industries have been soaring on the back of fast progress made in the Saudi Aramco deal. The other reasons that are responsible for soaring price is the increase in Reliance Jio and its digital footprint. The expansion of Reliance industries in solar power business has also positively impacted the prices," said Ashis Biswas, Head of Technical Research at CapitalVia Global Research.
He expects the price of Reliance industries to go till the level of Rs 2,700-2,750 by the end of the year.
Global financial Firm Morgan Stanley has an 'overweight' view on RIL stock with a target price of Rs 2,269.
"Strand Life's acquisition has added another stack to the digital health ecosystem plans. In the past four years, the company has completed $4 billion in acquisitions," Morgan Stanley underscored.
Vishal Wagh, Research Head of Bonanza Portfolio is of the view that one can invest in the stock with a stop loss below Rs 2,180 for the target of Rs 2,600-2,720 plus in the next couple of quarters.
"Those who are already holding it can continue to hold it. Even averaging at this level is possible with said stop loss," said Wagh.
Santosh Meena, who is Head of Research at Swastika Investmart believes the stock of RIL can hit the target of Rs 2,850 soon.
"Reliance Industries shares have witnessed a breakout of 1-year of consolidation. It may lead to a fresh leg of the bull run in this counter after a period of underperformance where Rs 2,500 is an immediate psychological hurdle and Rs 2,850 is an imminent target. On the downside, Rs 2,375-2,275 has become a strong demand zone," said Meena.
Abhijeet Bora, AVP – Fundamental Research, Sharekhan by BNP Paribas
has a buy call on the stock.
He underscored that RIL’s earnings outlook is improving with the company's Singapore complex gross refining margin (GRM) in recovery mode.
"Singapore complex August GRM stood at nearly $3.4/bbl due to improving demand, declining petroleum product inventories and refinery outages due to hurricane Ida," Bora pointed out.
Besides, potential materialisation of a likely minority stake sale in the oil-to-chemicals (O2C) business could unlock value of the stock, Bora said.
The growth prospects of company's Jio business is also looking bright.
Bora highlighted that the affordable JioPhone Next (4G enabled smart phone) is slated to be launched on September 10 which would help Jio to gain subscriber market share while likely upgradation of exiting feature phone users to smart phone could aid ARPUs (average revenue per unit).
All these factors make the stock an attractive bet for investment.
Technically, the stock has provided a breakout from the sideways consolidation with a clear buy crossover in its daily momentum indicators.
"The breakout has come after three-quarters of consolidation and with this, it seems that the next 1-2 quarters are likely to be positive for the stock," said Jay Thakkar, Vice President and Head of Equity Research at Marwadi Shares and Finance Limited.
"The support on the lower side is pegged at Rs 2,250 and the target on the upside is Rs 2,800-Rs 3,000 from hereon, so the risk-to-reward is absolutely in favour of the bulls. Hence, one can buy the stock at the current level as well as on dips with a closing basis stop loss of Rs 2,250," said Thakkar.
At this juncture, the stock looks set to scale fresh peaks and in the long-run, with occasional profit-booking, the stock is expected to give healthy returns to investors owing to its strong fundamentals and business growth plans.
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