Brokerages bullish on RIL post Q4 earnings

Mukesh Ambani-led Reliance Industries exceeded street expectations with ₹18,951-crore profit in the fourth quarter, prompting several brokerages to raise the stock target price of India’s largest private company.

Foreign brokerage Morgan Stanley maintained its ‘overweight’ rating on RIL with a target price of ₹3,046 per share, a 3% upside to the stock’s closing price on Monday.

RIL's Q4 earnings slightly beat estimates, says Morgan Stanley. “Energy EBITDA stood out while retail was lower,” the brokerage says in a note.

Jefferies raised its target price on RIL by 15% to ₹3,380 from ₹3,140 earlier. “While O2C and Jio were ahead, retail missed. Retail growth was soft though balance sheet improved and net debt declined aided by capital raise and asset divestiture. Jio was ahead on higher ARPUs due to improved subscriber mix. O2C profitability rose on robust refining while petchem was subdued,” the brokerage says. Jefferies raised RIL's financial year 2024-25 and 2025-26 EBITDA estimates by 3% and 1% respectively.

UBS has also maintained ‘Buy’ rating on RIL with unchanged price target of ₹3,420. Digital, retail and upstream oil business drove the year-on-year EBITDA growth, says UBS.

HSBC hiked its target price on Reliance Industries from ₹2,600 to ₹2,770 - 6% downside from its closing price on Monday. Retail – revenue growth was a tad weak at 11% year-on-year versus earlier 19-22% levels, as churn continues, with net store additions slowing to 62 compared with gross additions of 562 during Q4, says HSBC. “We expect O2C to remain steady, retail to recover by 2H24, and digital to await tariff hikes before its next stage of growth,” the brokerage notes.

Nomura reiterated ‘Buy’ on Reliance Industries while raising its target price from ₹3,165 to ₹3,450, implying 16.6% upside from the stock’s closing price on April 22.

BofA Securities also maintains a ‘Buy’ rating on RIL led by favourable risk-reward.

JP Morgan, which maintains an ‘overweight’ rating on the stock, cautions that continued weakness in retail top line can be a risk to valuations. “The retail business seems to have undertaken some restructuring in 4Q - with closure of 500 stores amounting to about 1.6 million sqft in the quarter. Headline sqft per store was up a sharp 15% YoY in 4Q (Revenue per store is up YoY, but revenue per sqft is down for the quarter), implying the company closed smaller stores and added bigger ones. This churn is likely partly behind the weaker 4Q revenue,” the brokerage says.

Domestic brokerage JM Financial marginally raised its target price on RIL from ₹3,300 to ₹3,320, 12% upside from the counter’s closing price on Monday.

Motilal Oswal also maintained a ‘Buy’ rating on RIL with a target price of ₹3,245. “EBITDA and PAT were above estimates primarily due to the growth in the O2C segment, which was partly offset by lower-than-estimated performance in the retail segment,” it says.

Emkay raised RIL’s FY25-26 earnings estimate by 2-5% each target price by 8% to ₹3,200 per share on the back of higher profitability in Jio.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)