Shares of Reliance Industries ended down 0.8% at ₹2,190.60 after gaining 12.45% in the last seven sessions.
CLSA said stronger crude prices and progress on the oil-to-chemicals business demerger had raised hopes of an action for the stake sale to Saudi Aramco announced in August 2019. The conglomerate’s FY20 annual report talked about the Aramco deal being in progress, but its recently released FY21 annual report lacks mention of Aramco and says that the demerger will enable strategic partnerships.
“Spot petchem spreads may drive a $500-million, or 3%, uptick in Reliance’s consolidated FY23 Ebitda or a $4-billion addition to its fair value. But this may not be large enough to offset the risk to the optimistic recovery in refining margins or a telecom tariff hike that are baked-into our estimates, and contribute nearly 75% of our FY21-23 earnings growth,” said CLSA.
The brokerage has retained an outperform rating on Reliance’s long-term prospects. The brokerage has a target price of ₹2,250 on the stock.
“While hopes of positive announcements from the upcoming annual general meeting may provide fuel for the stock over the coming two weeks, we do not foresee big near-term triggers. We are positive on the long-term prospects of its ecommerce and tech businesses,” said CLSA.
