Upbeat analysts' view on Jio sends Reliance stock higher by 4%

Moneycontrol NewsShares of Reliance Industries clocked its fresh 52-week high on Friday, driven by positive observations by analysts about the company’s prospects as well as the stock. The scrip rose over 4 percent intraday.Analysts are upbeat on the stock for a variety of reasons ranging from high-average revenue per user (ARPU) users target to cut in glitches.Bank of America Merrill Lynch has reiterated its buy call on the stock with increased target price at Rs 1,375 per share (from Rs 1,200 earlier). The brokerage house increased Jio’s EV (enterprise value) in its SoTP (sum-of-the-parts) from Rs 87 to Rs 280. This, it says, is in line with a sector review that analysts at the firm have undertaken. Going forward, it sees the volume of users paying Rs 99 to be a near term catalyst for the stock. Telecom segment apart, it estimates completion of chemical projects to lift EBITDA (earnings before interest, tax, depreciation and amortisation) by USD 2.8 billion in FY19.CLSA has retained its buy call on the stock with increased target price at Rs 1,500 (from Rs 1,350). It highlighted the management’s take on sorting out interconnection issues in this month. According to the management, Jio’s capacity advantage gives it a 3-4 year headstart and that its 4G capacity is 5 times of the remaining industry.Morgan Stanley has an overweight rating on the stock with a target price of Rs 1,506 per share. It feels that execution of energy projects and clarity on telecom KPI should act as key triggers. The company may achieve EBITDA break-even on telecom investments by the end of first year of operations, the analyst firm observed.Goldman Sachs expects the stock to react positively to the management’s targets on Jio. The value for Jio in its SoTP is USD 4.5 billion on 0.7 times price to FY16 book value. Meanwhile, Deutsche Bank feels that Jio’s outlook and pricing strategy was in line with its expectations. It believes that Jio’s revenue share will be driven by share of data capacity among players. The stock has gained over 22 percent in the past one month, driven by key announcements of offers and tariffs for Jio subscribers. At 09:47 hrs, the stock was quoting at Rs 1,278.45, up Rs 45.20, or 3.67 percent, on the BSE. It touched a 52-week high of Rs 1,287.80.(Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.)