The index heavyweight had rallied 3% on Monday, and was the second-highest contributor to the Nifty 50 upside.
Jefferies wrote in its note that the risk-reward for Reliance Industries has turned “compelling”. It must be noted that the stock had corrected nearly 20% from its recent peak.
The foreign brokerage expects an improvement in Singapore Gross Refining Margin (GRM) year-on-year in Calendar Year 2025, driven by favorable refining demand-supply dynamics and the announced closure of 1 million barrels per day, which should aid to Oil to Chemicals (O2C) profitability.
Jio’s strong traction in home broadband subscriber additions positions it well for monetising 5G, with a potential public listing expected in 2025, Jefferies said.
While Reliance’s retail segment showed strong performance in October, a sustained recovery may take another two quarters.
The current valuation factors in a retail business value of $57 billion, which Jefferies considers pessimistic.
On November 25, Citi had upgraded RIL shares to ‘Buy’ from its earlier rating of ‘Neutral’. It also increased its price target to ₹1,530 from its earlier projection of ₹747 on the stock.
Citi noted that after a period of underperformance, the risk-reward for Reliance Industries has turned favourable.
Morgan Stanley also has an ‘Overweight’ rating on Reliance, and a price target of ₹1,662 per share.
In its report, the brokerage said that RIL’s refining margins are beginning to recover after two challenging quarters. It also noted an increase in permanent refinery capacity shutdowns.
Morgan Stanley expects the company’s free cash flow engine to pick up pace as approximately 0.6 million barrels per day of refining capacity are expected to shut down globally by next year.
Additionally, net capacity additions are expected to be only half of the growth in demand.
Out of the 38 analysts that have coverage on Reliance Industries, 32 of them now have a ‘Buy’ rating on the counter, while three analysts each have a ‘Hold’ and ‘Sell’ recommendation, respectively.
Shares of Reliance Industries ended 2.02% higher on Monday at ₹1,290.95.
