JP Morgan recommends "Overweight" on Reliance Industries

16 Jun 2022 , 11:43 AM

The shares of Reliance Industries climbed more than 2% in early trade on June 16 after JPMorgan India improved the firm’s rating and boosted the target price.

Reliance’s rating was improved to overweight from neutral, and the target was lifted to Rs 3,170 per share from Rs 2,575 per share, representing a gain of more than 22% over the next 12 months.

Its rating increase is based on an improvement in the refinery and upstream gas companies’ earnings expectations, as well as the consumer technology firms’ valuations being stable, according to the company.

JPMorgan expects the company’s outperformance against the Nifty50 will continue in 2022, given the likelihood of increases to Wall Street’s earnings estimates.

On the BSE Sensex and Nifty50, Reliance is among the top gainers. The brokerage has boosted its earnings per share forecast for 2022-23 by 19% and for 2023-24 by 17%.

“Our earnings estimates imply a sharp pullback in diesel and gasoline cracks from current record levels, but Reliance remains among the best-positioned refiners globally, given the ability to buy and process arbitrage barrels, diesel heavy slate, and export focus,” JPMorgan India wrote in a June 16 note.

On the BSE, Reliance was trading at Rs 2,644.25, up to Rs 47.95 or 1.85%, at 09:38 hours. On 29 April 2022 and 28 July 2021, the stock reached a 52-week high of Rs 2,855 and a 52-week low of Rs 2,016.60, respectively. It is now trading at a 7.38 percent discount to its 52-week high and a 31.12 percent premium to its 52-week low.