Reliance stock target price is raised by Bernstein, predicts a 34% surge

29 Jun 2022 , 01:04 PM

The research firm maintained a “outperform” rating while raising its stock target price from Rs 2,830 to Rs 3,360.

Reliance Industries is expected to grow by 34%, according to Bernstein Research, which also notes that the company is displaying growth across all of its segments. It believes that the potential for earnings growth is more than what the consensus estimates imply.

The research firm has maintained a “outperform” rating on the company while raising its target price from Rs2830 to Rs3,360. Based on
FY23 estimated earnings per share of Rs154, which is 29% more than consensus projections, the company has been valued.

Compared to other analysts who cover the stock, this goal is the highest. The consensus rating for the company is “buy,” with a 12-month target range of Rs1,850 to Rs3,360.

On Thursday, Reliance shares are up 1.59% at 12:55 pm.

Rising refining margins are the stock’s main short-term asset. Despite the company’s ventures into other industries, its oil refining division remains its revenue-generating cash cow.

Benchmark Refining margins at the Singapore complex are trading at a record $36 per barrel in June. With no immediate relief, the crack spreads for diesel, gasoline, and kerosene are at historical highs of $44, $26, and $39 per barrel, respectively.

With a supply deficit and lower feedstock prices, Bernstein predicted that Reliance Industries’ refining margins might reach record highs of $25.5 per barrel in FY23, up from $9.8 per barrel in FY22.

Reliance has also profited from Russian crude’s lower price. The price of Urals (the Russian oil grade) is 20—25% less than the price of Dubai oil, which results in an extra $6—8 per barrel spread on refining margins. However, Beveridge warned that given increased scrutiny, this might not be sustainable.

The main threat is a recession that causes margins to drop significantly the next year.

According to Bernstein, a solid industry structure and government reforms are setting the way for additional tariff increases in the telecom sector. Jio is therefore poised to produce solid profits as a result of rate increases.

Similar to how Reliance Retail’s development prospects have increased as the economy has expanded, foot traffic there has reached 104% of pre-Covid levels. Store expansions have also continued to be robust, Bernstein said.