Reliance Industries hits new high; stock surges 50% from 52-week low

The stock hit a new high of Rs 1,031, up 1% on the BSE in intra-day trade on Thursday, rallied 50% from its 52-week low of Rs 686 recorded on July 3, 2017 in intra-day deal

Shares of Reliance Industries (RIL) hit a new high of Rs 1,031, up 1% on the BSE in intra-day trade on Thursday. The market value of the Mukesh Ambani-led RIL appreciated by 50% from its 52-week low of Rs 686 recorded on July 3, 2017 in intra-day deal.

In past one year, the stock outperformed the market by surging 45% as compared to 14% rise in the S&P BSE Sensex.

“RIL is among the top 10 global petrochemical manufacturers, and commands a share of over 30% in the domestic polymer market and about 50% in the polypropylene market. Its strong market position helps it operate its petrochemical plants at full utilisation and benefit from its large scale of operations and high level of vertical integration. These operating efficiencies support RIL's strong profitability in the petrochemicals segment,” CRISIL said in recent rating action.

RIL has recently commissioned the world's largest ethane cracker project, the final phase of its Para-xylene project, and started its Refinery off-gas cracker (ROGC) and downstream projects. These projects will add further value to the company's petrochemical business. Operating efficiencies will likely benefit from these projects, resulting in further integration benefits over the medium term, the rating agency said.

The company has a strong financial profile reflected in robust debt protection metrics and gearing of less than 1 times. The company is approaching the end of its large capex plan in its petrochemical & refining and telecom segments. This capital expenditure is mainly to strengthen its refinery and petrochemicals business and in the pan-India telecom and broadband services through Reliance Jio Infocomm, it added.

“RIL’s capex of USD 18.5 billion in Refining and Chemicals is nearing completion. Some projects are already operational, and will boost EBITDA in the core business over FY17-20E. During the last five years, high capex in Telecom and Core business has dragged RIL's free cash flow. Rising dividend payouts are likely hereon. Jio continues to gain 4G subscriber share, making us constructive on the business,” HDFC Securities said in Q4FY18 results update. The brokerage firm maintains ‘buy’ rating on the stock with 12 month SOTP-based target price of Rs 1,178.