In the last year, Reliance Industries (RIL) According to brokerage and research firm Motilal Oswal, the consumer business has seen strong delivering on the back of value unlocking, which has helped in valuations. Consumer Business – Reliance Jio and Reliance Retail are highly valued given their strong growth potential.
The brokerage sees price hikes in the telecom business and a revival in the retail business – led by strong growth potential at JioMart – as key levers for the stock over the next two years. A strong earnings lever in the consumer business should support the stock. The brokerage values the stock at 2,900 (Target Price) and repeats your Buy Rating.
“Reliance Industries’ telecom vertical RJio is in a sweet spot as peers Bharti and VIL (Vodafone Idea) have hiked 20% tariffs. We expect RJio to follow suit, achieving a 22%/7% gain on RJio/Console EBITDA. In addition, the improvement in traction in JioPhone Next should be a contributing factor,” the note said.
The retail segment, on the other hand, is witnessing a strong revival across categories during the festive season, quick store additions, and healthy scale in the digital business – these factors should propel sharp growth from Q3FY22 onwards, according to Motilal.
Meanwhile, GRMs are weakening amid the worsening COVID-19 situation in Europe. However, the Petrochem segment should make up for the impact on account of good demand and continued delays in upcoming capacities.
Refining oil demand is expected to be subject to volatility, but higher Petrochem margins will keep profitability, the note said. Margins are expected to be higher in the short term, as the brokerage expects Petrochem margins to come down once the expansion is complete in the US and the Middle East.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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