RIL stock hits over 2-month high in a weak mkt; surges 12% in two weeks

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

Shares of Reliance Industries (RIL) hit an over two-month high of Rs 2,513.50 after the shares gained 2 per cent on the BSE in Tuesday’s intra-day trade. The stock was among the top gainers on the S&P BSE Sensex, which down 0.33 per cent at 57,104 points at 10:02 AM.

The stock of RIL, which hit its highest level since January 19, 2022 today, had hit a record high of Rs 2,750 on October 19, 2021. In the past two weeks, RIL has outperformed the market by surging 12 per cent as compared to a 7-per cent rise  in the benchmark index.

On Sunday, March 20, 2022, Reliance Retail Ventures (RRVL), subsidiary of RIL, announced the acquisition of 89 per cent stake in Purple Panda Fashions for Rs 950 crore, which owns and operates the Clovia business, through secondary stake purchase & primary investment.

Clovia is India's leading bridge-to-premium D2C brand democratizing aspirational innerwear and loungewear for millennial women. With this acquisition, RRVL will further strengthen its portfolio in the innerwear segment, having already acquired Zivame and Amante brands.

According to a Business Standard report, lenders to ailing textile firm Sintex Industries have approved a resolution plan submitted jointly by RIL and Assets Care & Reconstruction Enterprise Ltd (ACRE). CLICK HERE FOR FULL REPORT

According to a The Economic Times report, Reliance Jio is mulling to raise around $750 million (about Rs 5,700 crore) through an offshore syndicated loan to primarily fund future capex needs.

RIL 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 per cent while retail, digital and others contributed 10 per cent, 34 per cent and 6 per cent, respectively.

ICICI Securities expects Jio's 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 per cent CAGR in FY21-24E. In retail, robust store addition trajectory is continuing and EBITDA CAGR of 36 per cent is expected in FY21-24E.

"Steady cash flow from O2C segment is expected to continue as we estimate stability in gross refininf margin (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 vertical,” the brokerage firm has said in February with a target price of Rs 2,670 per share.

Technical View 

Bias: Positive
Target: Rs 2,714

Upside: 8%

The stock has sustained above its 100-DMA (Daily Moving Average), placed at Rs 2,420, for a third straight trading session, which is a positive sign. The stock is currently testing the resistance at the higher-end of the Bollinger Band around Rs 2,518.

If the stock is able to break and close above this level, then we may see further upside towards Rs 2,600-level, above which the next target would be Rs 2,714.

The key momentum oscillators are also in favour of the bulls on the daily chart, barring the Stochastic Slow which is in the overbought zone.

(With inputs from Rex Cano)