Results for Reliance Industries’ fourth quarter: Brokers raise the target price of RIL shares; should you buy?
Current share price of Reliance Industries: The billionaire Mukesh Ambani’s company, Reliance Industries (RIL), released its quarterly results for the months of January through March on Monday. Several brokerages have increased their target prices for the company’s shares after these data were made public.
According to an ET article by Nikhil Agarwal, encouraging comments from RIL’s management about reducing capital expenditures (capex) and the potential for higher telecom rates contributed to the hike in target pricing.
Despite a 14% rise in value this year, RIL’s shares was trading flat on Tuesday morning after the announcement of its results. Brokerages are feeling upbeat, however, as some have raised their target prices to as much as Rs 3,500.
The international brokerage firm Jefferies increased its target price for Reliance Industries (RIL) from Rs 3,140 to Rs 3,380, citing the company’s anticipated rate increases from Jio as the primary driver of the 14% EBITDA growth in FY25.
Due to higher sales per square foot from new shops that have opened in the previous two years, UBS has set a target price of Rs 3,420 for RIL, indicating that retail company sales would expand in the near future.
While maintaining a neutral view on RIL, Macquarie has increased its target price from Rs 2,560 to Rs 2,630. Morgan Stanley, on the other hand, has maintained a bullish perspective and set a target price of Rs 3,046.
While Bernstein’s target price is Rs 3,160, Bank of America (BoFA) has set a target price of Rs 3,250.
elevated hopes for RIL
Reliance Industries (RIL) has a maximum target price of Rs 3,500 set by domestic brokerage Nuvama. They think that while supporting its conventional industries, RIL’s new energy initiatives will propel the company’s next stage of development. The lowest annual growth rate in three years for Reliance Retail was 11%, mostly as a result of shop reorganization and a higher baseline.
Equirus Securities said that the issue became worse due to the continuous decrease in discretionary expenditure. Reliance Industries did, however, continue to have a strong operating margin in the most recent quarter—7.4%. Reliance Retail has a lot of potential in the Indian market, despite their expectation that this weakness would persist in the near future. According to Equirus, the firm is expected to develop at a compound annual growth rate (CAGR) of 16% for EBITDA and 13% for sales between FY24 and FY27.
Debt and capital expenditure worries
Since analysts anticipate a steady decline in Reliance Industries’ net debt, they feel that concerns over the company’s debt are overblown. This is due to the fact that capital expenditures (capex) are planned to be mild, and more internal cash creation will be used to pay for capex.
