On Tuesday, shares of Reliance Industries Limited (RIL) surged as much as 5 percent to Rs 1,298.80 on NSE. The stock gained after the international brokerage house Morgan Stanley raised the company's earnings target and maintained its "overweight" rating. It revised its price target on the stock from Rs 1,349 to Rs 1,469.

The brokerage is also bullish on RIL's earnings. Morgan Stanley said that better refining margins, lower tax and cheaper gas feedstock cost, along with a reduction in balance sheet leverage should de-risk earnings growth outlook and increase investor confidence.

It projects earnings CAGR (compound annual growth rate) of 17 percent for FY 19-21 period. Earnings forecasts for the financial years 2019-20 and 2020-21 was raised by 7 percent and 12 percent.

The brokerage expects a recovery in energy earnings in both refining and petrochemicals.

"Recovery should be slow, but slowing supply (either through rebalancing in the industry or slowing capacity additions) should support margins. We believe the target of zero net debt by F2021 will help lower investor concerns about debt (which has increased steadily over the past seven years)," the report said.

RIL's shares last touch their 52-week high of Rs 1,417.50 on 2 May 2019.