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RIL Shares Still 14% Away From Their 52-Week Highs: What Should Investors Do?
As market sentiment improved in line with global peers, Sensex was again above 49200 levels and Nifty climbed to 14478 levels and among top contributors are some of the bluechip names such as Bajaj twins and Tata Motors.
And also, Reliance Industries is another heavyweight stock that was up for the second-straight day after the conglomerate announced its plans to embed Jiomart app in Whatsapp in next six months, there was seen a spike in stock price of RIL by almost 3% in the previous day's session. And now again with a jump in the indices, the stock has again gained to levels of Rs. 2029 per share, a surge of over 2 percent.
RIL is due to announce its Q3FY21 earnings on Friday, January 22, 2021.
High delivery-based buying in these stocks indicate their improving prospects," noted VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Earlier, post massive sale in its digital and then later in its retail arm there was seen some sluggishness in the scrip which now seems to be getting back to its foot.
Nonetheless as huge liquidity is set to pour in with more global banks coming out with huge stimulus packages to bail out the battered economies there is also a possibility and threat of bubble valuations and the tendency of sharp corrections.
Buy, Sell or Hold RIL Scrip?
Now for the investors in RIL or those who want to enter the scrip, is it the opportune time, here is what experts suggest:
RIL move defies overall market trend when market logged highs every other day
In September of 2020, the scrip of RIL hit its highest price of Rs. 2369.35 on September 16 and since then has corrected sharply. Now, what is interesting to note here is that ever since the US Presidential elections prompted the Indian markets to new high, it was the RIL stock that did not catch up.
Goldman Sachs suggest a 'Buy' call on RIL
And the brokerage and research firm has reiterated a buy recommendation on the scrip on the basis of multiple catalysts for the stock price up ahead.
"Amid the ongoing recovery, RIL Retail has significantly outperformed peers, with revenue continuing to grow despite lower footfall on-year," the report said. RIL's retail revenues are expected to grow further in the coming years with forecasted overall core retail revenue CAGR of 40%. "Within e-commerce, we forecast RIL's online GMV will reach US$35bn in FY25E with a 31% market share," Goldman Sachs said. Also other factors cited are stake sale in the company's energy business, product launches in the e-commerce, augmenting margins in the energy vertical and also tariff increase for Jio shall propel a surge in the share price of RIL.
Refining margins could revive in the coming quarters from broader cracks improvement, widening light-heavy differentials from the middle of this year as OPEC production starts to come back, and benefits from the pet-coke gasification project, added the brokerage and research firm.
Target price and valuation
The base case target price of Goldman Sachs of Rs 2390 per share that implies an upside of 18% from current levels. "We continue to use 8X CY22E (FY23E) to value the chemical business and 6.5X for refining and marketing; we use EV/EBITDA to value the core refining and (petrochemicals) business, and we use DCF to value the high-growth telecom and retail business (online and offline)," the brokerage firm said.
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