Goldman thinks Reliance will breach its 52-week high

Shares of Reliance Industries (RIL) jumped 2.32% on Wednesday to hit the day’s high of Rs 2,951.90 on the NSE following Goldman Sachs‘ buy reiteration on the oil-to-telecommunications conglomerate. The US-based brokerage also hiked the price target to Rs 3,400 from Rs 2,925 earlier.

RIL shares had ended at Rs 2,883.15 in the previous session and today they surpassed Goldman’s previous target price of Rs 2,925.

In a stock review note, the global brokerage said that the risk-to-rewards ratio was still favourable. The stock has been hovering near its 52-week high of Rs 3,024.90 since hitting this level on March 4.

Goldman sees 17% CAGR growth in the company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) over FY 2024-27 with capex at its peak and inflecting returns. The brokerage noted that RIL’s capex is peaking in longer gestation capex businesses.

In its view, the new business returns are likely higher, and capex to EBITDA turn also remains faster. It said that returns inflection has been a key driver for RIL’s outperformance.

The index heavyweight was the largest index contributor today, catapulting Nifty over 100 points higher, and has given nearly 32% returns in the past 12 months. This is superior to the returns given by Nifty in the same period at 30%.

RIL is currently trading above its 50-day and 200-day simple moving averages (SMA) with momentum indicators showing considerable upside from the current levels. The day’s RSI and MFI as reported by Trendlyne stood at 47.4 and 36.1 which is a medium range. A number above 70 is considered to be overbought while 30 is seen as oversold.

India’s largest company by way of market capitalisation had in January reported a 9.3% year-on-year (YoY) growth in consolidated net profit for the quarter ended December to Rs 17,265 crore. Consolidated revenue from operations grew 3.6% YoY to Rs 2.28 lakh crore, a tad lower than the estimated Rs 2.36 lakh crore. Sequentially, the bottomline declined 0.7% and the topline fell nearly 3%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Roy Walsh

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