Deven Choksey Projects Reliance Stock to Reach ₹1,800
Deven Choksey anticipates a significant rise in Reliance Industries' stock, estimating a target of ₹1,800 per share based on strong refining margins.
Choksey's target implies a potential 55% increase from Friday's closing price.
Reliance's refining margins are bolstered by exports to African and European markets.
The company's stake in Jio Platforms adds substantial value, estimated at ₹700-800 per share.
Deven Choksey, managing director of DRChoksey Finserv, has set a target price of ₹1,800 for Reliance Industries Ltd's stock, suggesting a potential increase of approximately 55% from its closing price on Friday. This optimistic forecast is attributed to strong refining margins in the oil-to-chemicals (O2C) sector and the significant value of Reliance's holdings in Jio Platforms, which may lead to a further upward revision of the target price.
In an interview with CNBC Awaaz, Choksey highlighted that Reliance has benefited from robust diesel refining margins during the September quarter and anticipates this trend to continue into the December quarter. He noted a strategic shift in Reliance's refining and export focus towards markets in Africa and Europe, which has become increasingly apparent. The company is reportedly sourcing Venezuelan crude at reduced costs and exporting refined products to these regions, enhancing its gross refining margins (GRMs).
For the second quarter of FY27, Reliance Industries reported record revenues of ₹3.62 lakh crore and an EBITDA of ₹62,409 crore, with net profit rising 34% year-on-year to ₹29,550 crore. Choksey emphasized that the September quarter was expected to yield strong earnings growth from the O2C segment, which has positively impacted the company's overall profit performance.
Choksey also pointed out the significant contribution of Reliance's investment in Jio Platforms to its overall valuation. With Reliance holding around 63% of Jio Platforms, which is currently trading nearly 40% above its issue price, the value of this stake is estimated to be around ₹700 per Reliance share. Depending on the applied discount, this value could range between ₹700 and ₹800 per share, further underscoring the potential undervaluation of Reliance's stock in the market.
Looking ahead, Choksey believes that the market has not fully recognized the value of Reliance's diverse business operations, suggesting that the stock remains undervalued at current levels. He attributed the recent upward movement in the stock price to technical factors following a period of sideways trading and a correction towards ₹1,150, indicating that the market is now adjusting to cover short positions established during that time.
