India's Largest Blue-Chip Stock Reliance Hits New High; Buy For 18% Upside In 9 Months, TP At Rs 3,285

India's largest stock, Reliance Industries (RIL) witnessed huge buying sentiment on January 15, with the heavyweight hitting a new 52-week high and ending with a 2% upside. Investors created more than Rs 32,000 crore wealth in a single day. Reliance is in focus after its subsidiary signed an agreement to sell its 100% equity stake in REC Solar Norway AS for $22 million cash. This heavyweight blue-chip stock is recommended to buy for a target price of up to Rs 3,285.

The latest target price means fetching of nearly 18% upside in Reliance in 9 months. Hence, Reliance looks like a good bet for the short term at the moment.

On BSE, Reliance stock ended at Rs 2,787.50 apiece, up by 1.73%. The stock hit a new 52-week high of Rs 2,792.65 apiece in the trading hours. Year-to-date, Reliance is up by 8% on this exchange. While in a year, the stock rallied by 23.53%.

In a single day, Reliance's market cap rose by Rs 32,069.35 crore. By the end of trading hours of Monday, Reliance's m-cap stood at nearly Rs 18.86 lakh crore compared to an m-cap of Rs 18.53 lakh crore last week on Friday.

As per the regulatory filing on Monday, Reliance said that its step-down wholly-owned subsidiary, REC Solar Holdings AS entered into a Share Purchase Agreement with Elkem ASA for the sale of its 100% equity stake in REC Solar Norway AS for an aggregate cash consideration of $22 Million.

Reliance also announced that the transaction is subject to certain regulatory and other customary closing conditions and is expected to be completed by April 2024. Upon completion of the sale, REC Norway will cease to be a subsidiary of the Company. REC Solar Holdings AS and its subsidiaries, engaged in the business of manufacturing and sale of Solar PV HJT cells and modules, will continue to be RIL's subsidiaries.

Elkem ASA is a silicon-based material provider with approx. NOK 45.9bn of sales in CY2022. It was founded in January 1904 and is listed on the Oslo Stock Exchange.

Meanwhile, REC Norway, a wholly owned subsidiary of REC Solar Holdings AS, is in the business of manufacturing kerf-based Polysilicon in Norway. RIL will continue to retain the technology and intellectual property rights of kerf-based Polysilicon. REC Norway had a turnover of ~NOK 1.1bn in CY2022 and a net worth of ~NOK 0.3bn as of December 31, 2022, contributing ~0.08% and ~0.03%, respectively of annual consolidated turnover and net worth of the Company for the financial year 2022-23.

Reliance is also in focus ahead of its Q3FY24 earnings report which is scheduled on January 19. Also, Reliance subsidiairies will declare their Q3 earnings report. Jio Financial Services Q3 results is scheduled on Janaury 15, while Reliance Jio and Reliance Retail will declare their financial results on January 19 as well.

Reliance Industries Share Price Target:

In its research note dated January 15, brokerage Progressive said, "Reliance Industries Limited is an Indian multinational conglomerate company headquartered in Mumbai, Maharashtra, India. It owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications. The company is one of the most profitable companies in India, the largest publicly traded company in India by market capitalization."

Progressive has recommended 'BUY' on Reliance for a target price of Rs 3,013 & Rs 3,285.

Reliance Industries Q3 Preview:

Prabhudas Lilladher in its report said, "RIL's operating performance is likely to improve amid improving refining margins. We expect Jio to show steady performance, while retail segment profitability should be resilient."

Meanwhile, JM Financial in its note said, "RIL's 3QFY24 EBITDA is likely to decline 1.8% QoQ to INR 402bn due to sharp fall in O2C EBITDA on account of moderation in diesel cracks (USD 20.3/bbl in 3QFY24 vs. USD 26.5/bbl in 2QFY24), narrowing of
Russian crude discount (to USD 2-3/bbl in 3QFY24 vs. USD 4-6/bbl in 2QFY24) and lower refining throughput due to maintenance shut-down and continued weakness in Petchem margin. However, this will be partly supported by robust growth in E&P earnings and steady growth in Digital & Retail business."

Further, JM assumed: a) O2C EBITDA to decline 11.7% QoQ to INR 144bn due to moderation in GRM to ~USD 10/bbl (vs. implied GRM of ~USD 12.5/bbl in 2QFY24); b) E&P EBITDA to rise 13% QoQ to INR 54bn due to lower opex and marginal increase in KG D6 gas output; partly offset by cut in
ceiling price for HPHT gas (to USD 9.96/MMBtu for 2HFY24 vs USD 12.12/MMBtu for 1HFY24); c) Digital EBITDA to grow by 2.9% QoQ to INR 145bn due to improvement in ARPU to INR 183 (from
INR 182 in 2QFY24) and increase in net subs by ~9mn QoQ, and d) Retail EBITDA to grow by 6.3% QoQ to INR 62bn likely driven by rising store count and increase in footfalls.

JM Financial has also recommended 'BUY' for TP of Rs 3,050 on RIL.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.