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Jefferies says 'buy' Reliance as Mukesh Ambani-led company key beneficiary of energy inflation

Jefferies says 'buy' Reliance as Mukesh Ambani-led company key beneficiary of energy inflation

Jefferies says 'buy' Reliance as Mukesh Ambani-led company key beneficiary of energy inflation
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By CNBCTV18.COMJun 8, 2022 3:09:43 PM IST (Published)

RIL: Jefferies has maintained its ‘buy’ call on shares of Reliance Industries Ltd (RIL) with a target price of Rs 2,950. At 3.04 pm, shares of RIL were trading 1.57 percent lower at Rs 2,728.95 on BSE. The Mukesh Ambani-led company is a key beneficiary of energy inflation and is seen benefiting from the continued strength in the refining business, the global brokerage firm said.

Investors seem to be lapping up Reliance Industries Ltd (RIL) stock after multiple brokerage firms said the oil-to-telecom conglomerate is likely to benefit from the recent upmove in crude oil prices. Jefferies has become the latest in line of brokerages that are betting big on the Mukesh Ambani-led company.

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Jefferies has maintained its 'buy' call on shares of Reliance Industries Ltd (RIL) with a target price of Rs 2,950. At 3.04 pm, shares of RIL were trading 1.57 percent lower at Rs 2,728.95 on BSE.
RIL is a key beneficiary of energy inflation and is seen benefiting from the continued strength in the refining business, the global brokerage said.
Even as RIL shares were under pressure today, down about 2 percent, the oil-to-retail-telecom company’s stock has surged 15 percent so far in 2022 amid rising crude oil prices globally.
At a time when higher oil prices seem to be a worry for the common man and several corporates, RIL is seen benefitting from the uptrend in oil prices.
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On Monday, Singapore's gross refining margin (GRM) hit a lifetime high of $25.2 per barrel mark on the back of rising demand for refined products globally, amid a tight supply situation with the Russia-Ukraine war and expectation that demand from China will improve after lifting lockdown.
GRM is the difference between raw material i.e crude oil and the total value of petroleum products coming out of an oil refinery.
Jefferies said that the inventories are at a multi-year low and there has been a decline in Russian exports, which are tailwinds to refining margin. Further, demand recovery in Europe and China, and lower diesel production in Europe are tailwinds to RIL's margins.
The US gasoline inventories are heading into the driving season, further aiding margin, it said.
RIL is Jefferies' preferred play on the near-term tailwinds in the refining segment.
The brokerage firm said that with every $1 barrel improvement in refining margin, the conglomerate’s consolidated EBITDA (earnings before interest tax depreciation and amortization) is expected to rise by $400-450 million.
EBITDA in the oil to chemicals business is likely to witness upgrades in FY23 as strength in the refining business continues.
Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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