Reliance Industries shares: Three factors that can lead recovery from 52-week low

Reliance Industries shares are in focus as the market heavyweight has gained today after eight days of fall. Reliance Industries shares, which hit a 52 week low of Rs 2218 on March 20 , 2023, were trading in green in the current trading session. The stock gained 2.9% intraday to Rs 2265.45 against the previous close of Rs 2201.60 on BSE.

The stock of Reliance Industries has slipped 8.52% this year and lost 11.43% in the last one year. Total 2.03 lakh shares of the firm changed hands amounting to a turnover of Rs 46.10 crore on BSE today. Market cap of the conglomerate stood at Rs 15.23 lakh crore in early trade today.

In terms of technicals, the relative strength index (RSI) of RIL stock stands at 29.7, signaling it’s trading in the oversold zone. The stock has a beta of 1.1, indicating high volatility in a year. RIL shares are trading higher than the 5 day moving averages but lower than 20 day, 50 day, 100 day and 200 day moving averages.

Here’s a look at three factors, which can push recovery in the large cap stock. Ramp-up of FMCG business While near-term retail growth should slow down in line with softer consumer demand, Reliance Retail’s focus and investments on sq feet additions, omni-channel distribution, multiple brands/acquisition, own brands focus, large warehousing space additions and scaling up new commerce/Jio Mart/FMCG are positive for the stock, said JP Morgan in a report.

Recent brand launches such as Campa Cola, Independence in Gujarat suggest visible strides in RIL’s FMCG foray in 2023, said international brokerage CLSA. Refining petrochemicals business JPMorgan sees continued strength in refining business, a likely rebound in petrochem spreads from decadal low levels from China re-opening, and volume growth in E&P – driving earnings growth for the Mukesh Ambani-led conglomerate.

Jio 5G to drive growth Jio 5G should drive the next leg of growth; while non-telecom been slow so far, should pick up Jio should have a relatively soft FY24 as telecom tariff hikes are not expected. “We continue to see subscriber growth, and the company’s mega 5G capex positions it well. Jio’s 5G launch (currently available across 134 cities and a pan-India rollout by Dec-23) and the company’s plans to connect 100mn homes via Jio Fiber and Jio Air Fiber should allow for material ARPU increase (blended basis) over the coming years,” said JPMorgan.

JPMorgan is positive on Reliance with a price target of Rs 2,960 for March 2024 . “An increasingly capital-scarce environment, RIL’s core strength of investing large amounts of capital in growth projects is a key positive,” the foreign brokerage said. CLSA said RIL is a bargain buy now. The stock is just 5% above a conservative value based on nearly 3-yr-old deal value for Jio & retail, a 15% discount to the announced Aramco deal value for O2C & nil value for new energy.

It sees a 35% upside to the stock.

Also read: HDFC, ACC, Sona BLW, Ambuja Cements, L&T: Stocks that 4 prominent life insurers bought in February

Also read: Coffee Day Enterprises shares rebound from 52-week low, climb 8% today

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