Shares of Reliance Industries are gaining momentum following multiple upgrades and bullish calls from brokerages. The stock rose 3 per cent on Friday after global brokerage Macquarie upgraded rating on the stock to outperform from neutral.
Macquarie believes that Reliance is likely to improve its earnings CAGR to 15-16 per cent over FY25-27. The brokerage has increased the target price on the stock from ₹1,300 to ₹1,500 apiece, a 24 per cent upside potential from previous close.
In addition, Kotak Institutional Equities upgraded rating from add to buy at a target price of ₹1,400 and Jefferies reiterated buy at a target price of ₹1,600.
Kotak analysts reasoned that subdued retail was the key reason for weak performance, but they expect store-rationalisation cycle to end soon.
Pertaining to Reliance Jio, Kotak sees long-term thesis intact. It added the delay in tariff hikes will reduce ARPU by 2 per cent for FY26 estimates; however, this would partly offset by the higher pace of broadband subscriber additions hereon, on the accelerated rollout of Jio AirFiber.
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Jefferies has emphasised the retail business growth and potential tariff hike in telecom business.
Kotak believes retail business will likely improve in the next few quarters. “News flows on telecom business IPO timelines, and likely another tariff hike in telecom can be a catalyst,” it added. Although the brokerage has cut EBITDA estimates for FY24-27 by 1-3 per cent, it expects earnings CAGR over 11 per cent.
The stock surged 3.01 per cent on the BSE to trade at ₹1,247 as at 11.05 am after hitting an intraday high of ₹1,247.40. It has soared 7 per cent from its 52-week low of ₹1156.