Facebook Pixel Code

Reliance Industries shares soar 10% in 1 month, Morgan Stanley bullish, sees 17% upside; check target price

Reliance Industries (RIL) shares have soared 10 per cent in the last one month amid extreme market volatility. Analysts at Morgan Stanley remain bullish and have put an ‘overweight’ call on the stock with a target price at Rs 3,253 per share, implying an upside of 17 per cent.

ril share price, reliance shares, ril shares
RIL shares were trading flat on Tuesday at Rs 2,779 on BSE.

Reliance Industries (RIL) shares have soared 10 per cent in the last one month amid extreme market volatility. Analysts at Morgan Stanley remain bullish and have put an ‘overweight’ call on the stock with a target price at Rs 3,253 per share, implying an upside of 17 per cent from June 6 closing price. The international brokerage firm believes that RIL’s energy vertical is on track to deliver its best quarterly performance in more than 20 years. It noted that the petrochemicals margins, despite lockdowns in China, are up on a quarter-on-quarter (QoQ). RIL shares were trading flat on Tuesday at Rs 2,779 on BSE.

Margins to be higher

RIL’s fuel refining margins are tracking at $17 per barrel, i.e., 2x above mid-cycle,” it said. Globally, Morgan Stanley expects a shortage of one refinery annually for the next few years. Analysts said in the report, “If we were to include arbitrage crude advantages, which RIL highlighted earlier, margins would be even higher, and 50 per cent above their last peak seen in mid-2008, despite higher fuel and oil loss, official selling price (OSP) and gas costs.”

“Regarding petrochemicals, investors have noted concerns about higher oil and a slower global economy. We think inflation in the global cost curve and slower-than-expected capacity adds will drive chemical margins toward mid-cycle levels as in April 2022. A recent correction in naphtha cracks also points to normalisation for chemical margins,” the brokerage added.

Collaboration with two-wheeler aggregators, OEMs to help RIL roll out its network efficiently

Analysts also noted that RIL tied up with Swiggy, Bluesmart, TVS, Mahindra, MG Motor India and Castrol to install EV charging stations in India for two-wheelers and four-wheelers. They believe that Reliance Industries’ focus on two-wheeler aggregators is a step in the right direction. “Overall, RIL’s approach to focus on two-wheeler aggregators (since two wheelers accounts for nearly 60% of the fuel consumption currently) with the likes of Swiggy and OEMs like TVS, should help it roll out its network more efficiently and reduce the fuel station network station handicap it has vs the top-three fuel retailers.

Note that RIL has 1400 stations while the top three players have over 56000 stations. According to the Morgan Stanley report, these collaborations will help integrate the four gigafactories and provide a low carbon solution on a direct B2C basis as well.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

If you are keen to know more about Nifty 50 and BSE Sensex levels and seek expert advice on what’s driving the gains and how to build your portfolio, track the latest stock market stats, share market news and top brokerage bets on Financial Express. Download the Financial Express App for the fastest and most reliable business news alerts, key investment strategies and latest movers and shakers from across financial market.

First published on: 07-06-2022 at 15:08 IST
Market Data
Market Data
Today’s Most Popular Stories ×