As investors lapped up shares of Reliance Industries (RIL) with both hands on Monday, the stock rallied around 7% to a fresh lifetime high of Rs 2,905 on BSE. The market capitalisation of India’s most valued stock jumped by Rs 1.2 lakh crore during the day to Rs 19.6 lakh crore.

Today’s rally was the single largest gain for RIL in the last three years. The previous best single-day performance was seen during the Covid rally. In the calendar year 2020, there were four instances when RIL stock had gained at least 10% with the best of 14.65% coming on 25th March 2020.

“It is a clear breakout. This stock has not performed for the last year and it has disappointed many people who were invested in it. But I feel now if it sustains above Rs 2,800, a move towards Rs 3,000 cannot be ruled out,” CA Rudramurthy BV of Vachana Investments said.

Also read | RIL shares zoom 7%, hit fresh 52-week high; m-cap tops Rs 19 lakh crore

In the last three months, the stock is up over 27% with analysts pinning hopes on the possibility of eventual listing of Reliance Jio and Reliance Retail after Jio Financial was spinned off into a listed entity last year.

What sparked 7% rally in RIL shares on Monday?

The recent 7% rally in Reliance Industries (RIL) shares took place on Monday. Investors were eagerly buying the stocks, which sent the price up around 7% to a new lifetime high of Rs 2,905 on BSE. This surge in price was significant, as during the day, the market capitalisation of India’s most valued stock increased by Rs 1.2 lakh crore to Rs 19.6 lakh crore.

At the company’s AGM in 2022, Ambani told shareholders that RIL’s market value would double by the end of its golden decade in 2027. To achieve that dream, the listing of both Jio and Reliance Retail is important.

Besides speculations around the demerger, investors are also expecting telecom companies to hike tariffs by 20% in Q2FY25 after the Lok Sabha elections.”In the absence of mobile tariff hikes, our FY26 forecast for Reliance Jio’s EBITDA will be lower by 22% to $7.6 billion. This could meaningfully impact Jio’s valuation around listing, hence we believe an upward trajectory of tariffs will be supported by Jio as well,” Jefferies said.

Analysts expect 2024 to be an eventful year for RIL as the past two years of investments move into the monetization phase.

“We think investment cycles will be shorter than in the past two decades, with limited impact on balance sheet leverage. The key to watch will be the startup of revenues from the new energy vertical, which we believe remains most underappreciated in NAV. A turn in the chemical cycle, a golden age for refining, traction in 5G subscribers, and a slowdown in investments in retail could be among key events that garner investor traction,” said Mayank Maheshwari of Morgan Stanley.

Jefferies, which has forecast 12% EBITDA growth in FY25 with Jio contributing lion’s share on the back of a tariff hike, has a target price of Rs 3,140.

Nomura analysts have given a target price of Rs 3,165 on RIL saying the conglomerate will benefit from its robust free cash flow generation of Rs 30,000 crore in FY25, declining capex levels to Rs 1.25 lakh crore, and declining debt levels to Rs 2.7 lakh crore. The commencement of new energy operations will also be a key event in the coming quarters for RIL.

(Data: Ritesh Presswala)

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