RIL Gained 11% to Rs.2191.50 in 2 days. What's Driving the Rally?
As an upbeat report by Jefferies bolstered the confidence in oil-to-telecom behemoth among investors, shares of Reliance Industries extended the rally, boosting 5 per cent on Monday. On Friday, The counter had gained 6 per cent.
If the prevailing momentum sustains, Jefferies expects 50 per cent upside in the refiner's petchem Ebitda. The brokerage added that sustained strong performance by the petrochemical vertical will improve the likelihood of O2C business stake sale in FY22.
Mukesh Ambani led oil-to-telecom company’s share has gained 11 per cent in the previous two sessions to Rs ,2191.50 on Monday. However, the counter is still 13 per cent off from its 52-week hit during September 2020.
The foreign brokerage has set the base target of the stock at Rs 2,580 level and suggested an upside scenario target of Rs 3,150, which would mean a 50 per cent upside from Friday's closing price.
In an interview, Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services, said, “Reliance's retail and telecom segments had plateaued in terms of growth.From now, the expectation is that the core oil-to-chemicals segment should start performing and that should drive the stock from here," he said. "The global demand has been pretty good. Oil prices have been stabilising around $60 per barrel, which is positive for oil producers," he added.
Sandip Sabharwal is not weighing much on the counter as he finds nothing new in some uptick in the petrochemical margins. "Reliance is moving just because of its traditional businesses. Nobody is talking about the new generation businesses because no one seems to be figuring out what Jio Platforms is doing besides the small e-commerce venture, which is somewhat stillborn and the telecom business," he said.