JP Morgan revises Reliance Industries stock target price, sees 33% uptick

The brokerage said it sees continued strength in the refining business, a likely rebound in petrochemical spreads from decadal low levels from China re-opening

JP Morgan, in a report, has noted that Reliance Industries (RIL) offers long-term investors an attractive entry opportunity, citing multiple catalysts including potential listings of consumer businesses, petrochemical growth, and large 5G capex monetisation.

The brokerage revised its target price for the stock to Rs 2,960 from an earlier target of Rs 3,015. On the BSE, the stock ended Thursday at Rs 2,226 apiece

"We view RIL’s recent range-bound stock performance (Rs 2,300 to Rs 2,800) as a period of consolidation. The large foreign sell-off in the stock is supportive from a positioning point of view,' the brokerage said.

The firm’s report also said that in an increasingly capital-scarce environment, RIL’s core strength of investing large amounts in growth projects is a key positive. However, near-term triggers for the stock gaining remain limited.

"New energy is likely a multi-year opportunity but may take over 12-18 months to emerge as a material part of the investment case. Foreign institutional investors’ ownership is at a six-year low, and the stock is 2 per cent from our bear case, further skewing risk reward favourably," the report noted.

The brokerage said that it sees continued strength in the refining business, a likely rebound in petrochemical spreads from decadal-low levels after China re-opening, and volume growth in exploration and production (E&P) driving earnings growth.

"RIL’s ongoing capex/investments should allow it to scale up its (already industry-leading) petrochem, telecom and retail segments. We expect this year’s AGM to focus on Jio Financial Services," the report added.