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TOP SEARCHES NIFTY TODAY RIL SHARE PRICE RAKESH JH

NEWS

Bernstein raises Reliance

Industries target price, sees
over 30% upside
Agencies

Synopsis
Rolling forward its valuation from FY23 to FY24, Bernstein has
raised its target price for RIL to Rs 3,360 from Rs 2,830,
suggesting a 33 per cent potential upside over Tuesday's
close. On Wednesday, the scrip opened lower but soon
recovered lost ...

By Amit Mudgill, ETMarkets.com

2
Jun 29, 2022, 11:22 AM IST

NEW DELHI: Reliance Industries (RIL) may

see its refining margins rise to a record level
of $25.5 per barrel in FY23, said Bernstein in
its latest note on Wednesday. The brokerage
said tari! hikes may drive strong Jio results
and that e-commerce acceleration across
categories will lift retail segment numbers.

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Rolling forward its valuation from FY23 to

FY24, Bernstein has raised its target price for
RIL to Rs 3,360 from Rs 2,830, suggesting a
33 per cent potential upside over Tuesday's
close.

On Wednesday, the scrip opened lower but

soon recovered lost ground. At 10.23 am, it
was trading at Rs 2,550.35 on BSE, up 0.84
per cent.

Bernstein said RIL's refining has been

exceptional with record margins and
expansion of the oil-to-chemicals (O2C)
business into downstream chemicals, which
still has decades of growth ahead.
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"The build out of JioMart (e-Commerce) and

omnichannel presence, scaling up of the Jio
platform, and investments in new energy to
accelerate energy transition will all
contribute to growth. With Reliance in the
midst of a secular growth phase, we expect
the combined Ebitda for the four businesses
to increase by 20 per cent CAGR in the next 4
years," the brokerage said.

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Bernstein expects FY23 Ebitda of Rs 1,76,500

crore, an increase of 48 per cent from FY22
Ebitda of Rs 1,19,300 crore and well ahead of
the current consensus of Rs 1,47,000 crore.

O2C earnings are expected to increase more

than in any other segment in FY23 driven by
record refining margins as a result of
exceptional market conditions, triggered by a
reduction in supply of refined products from
Russia and also from China.

"Based on our estimates, we believe company

Ebitda can more than double by from FY22
to FY26 to Rs 2,47,000 crore mainly through
growth in new energy, digital and retail,
while the O2C will see earnings normalise
FY24 onwards as refining margins regress to
the longer-term average," it said.

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According to Bernstein, O2C business'

contribution to the total Ebitda would be 48
per cent in FY23.

"Beyond FY23, the digital and retail

businesses will grow at a faster rate which
will limit the Ebitda contribution from O2C
to around 20-30 per cent of total Ebitda. This
still remains significant. Digital was the
largest contributor of Ebitda in FY21 at 38 per
cent, which will continue to represent 36 per
cent of total Ebitda over the next 5 years.
Retail (o"ine + online) will grow from 12 per
cent of total Ebitda in FY22 to 23 per cent by
FY26," Bernstein said.

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Assuming RIL can execute its new energy

business strategy as planned, the brokerage
is pencilling in a nearly 10 per cent Ebitda
contribution by FY26.

(Disclaimer: Recommendations, suggestions,

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