Global investment advisory firm Bernstein on Wednesday came out with Outperform report on Reliance Industries while increasing the price target to ₹3,360 (earlier ₹2,830), as it sees strength across all segments for the most valued Indian company.
The stock closed at ₹2,579.05, up ₹50.05 or 2 per cent, on the BSE on Wednesday.
Russian crude advantage
Refining margins could rise to record levels to $25.5/bbl in FY23 (up from $9.8/bbl in FY22) with supply shortage and lower feedstock prices, it said. Reliance has also taken advantage of Russian crude, but this may not be sustainable given the increased scrutiny. However, the key risk ahead is a recession that leads to a sharp decline in margins next year, it cautioned.
Telecom vertical Jio is set to deliver strong results driven by tariff hikes. ARPU expanded by 11 per cent QoQ/21 per cent YoY to ₹167.6 led by tariff hike and improved subscriber mix. "We believe the stage is set for more tariff hikes driven by stable industry structure and government reforms," Bernstein said.
Incidentally, Mukesh Ambani has resigned as the director of Reliance Jio effective June 27, and appointed his eldest son Akash Ambani as the chairman of the board.
Retail outlook improves
Reliance Retail growth outlook has improved as the economy opened up (footfalls at 104 per cent of pre-Covid levels). Store additions remained strong (overall about 15,200 stores). “We expect retail revenues to grow at 30 per cent+ CAGR driven by strong store additions.”