CLSA expects that Reliance Industries’ stock will rise by 35% in the next year. On Wednesday, the share price of Reliance Industries Ltd (RIL) rose for the second day in a row. Reliance’s stock price rose Wednesday, reaching an intraday high of $2,291.45 per share on the NSE.
On Tuesday, Reliance’s share price recovered from its March 2022 low, attracting the attention of stock market experts, since the large-cap stock and Sensex heavyweight has been in base-building mode since the year 2023. Reliance shares have dropped 11% year to far, despite repeated reductions in windfall tax by the central government.
According to stock market experts, today’s advance in Reliance share price may turn out to be a minor pullback rally, as the Reliance share price chart pattern implies that the stock may only go bullish over 2,350 apiece levels. But, for long-term investors, CLSA has issued a strong ‘buy’ recommendation, believing that Reliance shares might rise by 35% from present levels in the next 12 months.
Causes for Reliance Industries’ share price drop
Santosh Meena, Head of Research at Swastika Investment, explained why Reliance’s share price has fallen in recent months “Fundamentally, the retail and telecommunications sectors are slowing, putting pressure on the company in an environment of rising interest rates. Another cause for the stock’s steep drop is selling by FIIs.”
Positional investors are advised to wait for additional details. Choice Broking’s Executive Director, Sumeet Bagadia, stated, “This gain in Reliance Industries shares could be only a pullback rally from the company’s one-year lows. The chart pattern of Reliance shares implies that the stock may become bullish only over $2,350 per share. It is predicted to hover between 2,175 and 2,350 till then. As a result, one should wait for a breakout over 2,350 levels on a closing basis before engaging in new buying. Those who have this stock in their portfolio should keep it with a stop loss of around $2,175 per share.” RIL share price forecast
However, CLSA feels that now is the opportunity for long-term positional investors to begin buying and continue to accumulate on every downturn, as the stock might rise by 35% in the next 12 months.
Addressing the fundamentals that may fuel Reliance’s share price surge, CLSA said, “We feel a lack of launches and growth sectors has kept the stock low over the previous 18 months. This may change in 2HFY24, when the business is expected to begin delivering its portable 5G device (Jio Airfiber) to ramp up wireless broadband additions and launch its inexpensive 5G smartphone as it monetizes its pan-India standalone 5G launch by end-2023. Recent brand launches (Independence, Campa Cola) indicate that Reliance’s FMCG venture could make visible progress in 2023.”
CLSA stated in its recommendation to long-term investors about Reliance shares, “With three years after the stake sale to PE investors, we believe there is a good likelihood of a Jio and/or retail IPO in the next 12 months. Despite increased 5G capex, consolidated leverage should remain well below 2x EBITDA. BUY for a 35% upside to our target price.”
When CLSA released its assessment, the Reliance share price was at 2,201.60 per share, and the brokerage expected a 35% increase from 2,206.10 levels.
