Nuvama Projects 46% Upside for Reliance Industries Shares
Despite a target price adjustment, Nuvama maintains a BUY rating on Reliance Industries, forecasting significant growth potential.
Nuvama revises Reliance's target price to Rs 1,703 from Rs 1,766.
Reliance's EBITDA for Q2 reached Rs 56,600 crore, exceeding market expectations.
The New Energy sector is projected to significantly boost earnings by FY28.
Nuvama has projected a potential upside of 46% for Reliance Industries shares, currently priced at Rs 1,164. The brokerage firm has maintained its BUY rating despite lowering the target price to Rs 1,703 from Rs 1,766 following the company's performance in the September quarter.
The recent quarterly results revealed that Reliance Industries achieved an EBITDA of Rs 56,600 crore, marking a 23% year-on-year increase, which surpassed market estimates by approximately 9%. This robust performance was largely attributed to the Oil-to-Chemicals (O2C) and Jio segments, although challenges in the retail and oil and gas sectors were noted, which may hinder overall growth.
Nuvama's optimism regarding Reliance's long-term growth is anchored in its New Energy initiatives, which are anticipated to start contributing to earnings significantly by FY28. The company has already established a solar module capacity of 6GW and a solar cell capacity of 5GW, with plans to expand this to 20GW by early next year. Furthermore, a 10GW capacity in the New Energy sector could add around 5% to Reliance's earnings.
The implications of these developments extend beyond immediate financial metrics. The expansion of the New Energy business is expected to enhance Reliance's O2C operations and support its goal of achieving net-zero carbon emissions by 2035. Nuvama believes that the anticipated growth in this sector could lead to more than 50% growth in overall earnings, thereby improving the company's valuation.
Looking ahead, key triggers for Reliance Industries' stock performance include the successful expansion of its New Energy operations, strong refining margins, and the potential public listing of Jio. Nuvama's revised target price of Rs 1,703 suggests a promising outlook for investors, reinforcing its positive stance on Reliance Industries as it navigates the evolving energy landscape.
