What’s making ICICI Securities see a new 52-week-high for Reliance Industries?

The research analysts of the broking firm ICICI Securities said in a note that “Reliance Retail and Jio to be growth drivers in near to medium term. Reliance Retail has been one of the fastest, largest growing retailers in recent times. In FY18-22, it recorded a staggering 30% revenue CAGR with sales worth nearly ₹2 lakh crore in FY22.The company bolstered its offering and continued to fill white spaces through acquisitions and spent nearly ₹10000 crore in FY22. It’s recent acquisition of Metro Wholesale business (B2B) for a consideration of ₹2850 crore (0.4x EV/sales) would further strengthen its backend supply chain with accelerated growth in JioMart Kirana orders (up 4x YoY) and on-boarding of new HoReCA clients.”

“The 5G launch has begun for Jio in the last couple of months and is likely to reach pan-India by December, 2023. Superior spectrum portfolio along with superior digital ecosystem offering lends Jio a competitive advantage even in 5G (as seen in 4G foray). We expect ARPU, EBITDA of Jio to grow at ~12%, ~22%, respectively, over FY22-25E. Singapore GRMs, which had declined at the start of Q3, have started improving amid rise in product cracks and are at ~US$9/bbl. This would likely improve Reliance’s GRMs and its refining segment earnings. The company announced capex plans worth ₹75000 crore in petrochemicals,” they said.

“Long term prospects and dominant standing of RIL in each of its product & service portfolio provide comfort for long term value creation. RIL’s consumer business will be the growth driver, going ahead. We revise our rating on the stock from HOLD to BUY. We value RIL at ₹3050 on an SoTP basis,” claimed the research analysts of the broking firm ICICI Securities.

Increment value accretion from ‘digital ecosystem’ that will be captured at the Jio Platforms (JPL) level and steady FCF generation in retail segment to enable it to maintain debt at lower levels & improve its ability to invest in future inorganic opportunities, are the two key triggers for future price performance of Reliance Ind, said the analysts.

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