Buy Reliance Industries For 3 Months For A Target Of Rs. 2670: ICICI Direct

Recently Morgan Stanley and other brokerages suggested RIL to be the beneficiary considering that it is repurposing its gasification assets. Now ICICI Direct in its latest report dated February 16, 2022 has chosen Reliance Industries as its Techno Funda pick.

Buy Reliance Industries for a target of Rs. 2670

Reliance Industries has been given a buy at a price in the range of Rs. 2380-2410 per share.

Technical outlook on the scrip:

The telecom sector has shown resilience despite recent elevated volatility. One of the preferred proxy plays for the sector is Reliance Industries, which has formed a potential triple bottom at 52 week's EMA. This has been held on multiple occasions since April 2020,coinciding with September 2020 resistance zone of Rs. 2370 thereby, offering favourable risk-reward setup.

Over the past three months the stock has retraced 61.8% of August-October 2021 rally (Rs. 2016-2751) at Rs. 2300. Slower pace of retracement indicates inherent strength

"The recent higher base formation has set the stage to resolve higher and head towards Rs. 2670 levels as it is the 80% retracement of secondary correction (Rs. 2751-2247).

Fundamental take on Ril

Reliance Industries is one of India's biggest conglomerates with a presence in refining & marketing and petrochemicals (O2C), oil & gas exploration, retail, digital services and media, etc. making it a well-diversified business entity. At the EBITDA level in 9MFY22, O2C and oil & gas contributed 50% while retail, digital and others contributed 10%, 34%and 6%, respectively.

• On Jio front, we expect the subscriber addition traction to recover with JioPhone Next picking up while ARPU hike benefits will accrue over the next couple of quarters. Digital service EBITDA is expected to grow at 19% CAGR in FY21-24E. In retail, robust store addition trajectory is continuing and EBITDA CAGR of 36% is expected in FY21-24E

• Steady cash flow from O2C segment is expected to continue as we estimate stability in GRMs and higher global gas prices augur well for oil & gas exploration segment.

Strong balance sheet post fund raising supports the company's aggressive expansion in new energy verticals.

Disclaimer:

The stock is taken from the ICICI Direct report and is not the call to buy in share by GoodReturns.in