Reliance Shares Muted Even Though Brokerages Stay Bullish On Expansion Plans

Brokerages were bullish on Reliance after the company's Chairman and Managing Director Mukesh Ambani unveiled next phase of growth in the company's annual general meeting.

What Happened: In its 47th annual general meeting, the chairman said the company will look to double its size before the end of the decade, with investments in retail, Jio and new energy businesses. 

The retail business and Jio which is worth over $100 billion (around ₹8.38 lakh crore) is expected to double its revenue and EBITDA in the next three to four years, the chairman said. The company's new energy business is expected to become profitable by 2031, the chairman added. 

Ahead of the AGM, the company announced a board meeting on September 5 to consider and approve issue of 1:1 bonus shares. 

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Brokerage Views: Nomura gave the stock a "buy" call with a target price of ₹3,600. The brokerage sees robust growth across segments which will give a three-year EBITDA annual growth rate of 13%. EBITDA growth will be further boosted by increase in free cash flow generation and sharp decline in net debt levels, the brokerage firm added. 

Macquarie gave the scrip a “neutral” call with a target price of ₹2,750. The new energy division is likely to deliver cash flows that are less cyclical, the research firm said. The segment has potential earning capacity in the next five to seven years like the oil to chemical business, the brokerage firm added. 

Jefferies also gave it a “buy” call with a target price of ₹3,500. The doubling of revenue and EBITDA for retail business in three to four years is ahead of the brokerage’s estimates, it noted. The new energy commissioning could see that will push out value discovery to FY27, the research firm added.

Price Action: Shares of Reliance Industries were up 0.43% at ₹3,054.95 on Friday morning.

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