RIL hits fresh record high, jumps over 2.5%

Several analysts turn bullish on stocks following RIL's optimistic remarks on controlled spending and strong retail performance in Q3 earnings.

Shares of Reliance Industries Ltd on February 2 hit a fresh record high with the stock gaining over 2.5 percent. At 10am, the stock was quoting Rs 2,930, a fresh record high, on the BSE, up over 2.5 percent in the past one month. Its current market capitalisation stands at Rs 19.7 lakh crore.

The stock experienced a significant uptick in January, rising around 11 percent, which marks its most substantial monthly increase since March 2022.

Analysts note higher oil prices could benefit RIL’s oil-to-chemicals (O2C) businesses in theory, but the recent increase may have disruptive effects such as higher logistics costs and shipping times. The net impact is challenging to gauge. If oil was the driving force, oil marketing stocks should have fallen. Potential listings of retail or telecom are likely, but there have been no recent developments on this front, they said.

JP Morgan suggests potential stock growth driven by a mid-FY25 increase in telecom tariffs and initiatives to boost monetisation of 5G. The consensus does not anticipate significant growth in O2C earnings, and Reliance might receive upgrades if a commodity cycle, particularly in refining, materialises in the near term.

JP Morgan also highlighted that the $10-billion investment in new energy ventures like solar and hydrogen could generate short-term excitement if Reliance sells a stake at a high valuation, akin to its previous strategies with retail and telecom.

Several analysts turn bullish on the stock following RIL's optimistic remarks on controlled spending and strong retail performance in Q3 earnings. The 22 percent drop in Q3 capital expenditure (capex) on-quarter to Rs 30,100 crore is linked to decreased spending by Jio after the 5G rollout and restricted retail expansion.

Analysts see the capex slowdown as 5G deployment nears completion. Despite a slight uptick in net debt, expectations of a positive trend arise from reduced capex and an enhanced EBITDA run rate, indicating favourable free cash flow for the next two years