(Bloomberg) – The sheer number of announcements by Mukesh Ambani at the annual shareholder meeting of his flagship company Reliance Industries Ltd. did not meet investors’ expectations, which are rising, according to analyst reviews.
Among the positives, the President of Reliance named Alphabet Inc.’s Google as the latest investor in Jio Platforms, promised to launch his own 5G solutions and said he plans to induce investors into the oil and chemical retail business of the indian firm. Still, a delay in a $ 15 billion deal with Saudi Aramco and a decrease in optimism that prevailed before the AGM saw the stock price drop on Wednesday. Shares have more than doubled from a low in March.
Here’s what analysts say about India’s most valuable company:
Buy in sauces
“Reliance’s share price witnessed a decline towards the end of the AGM as most of the news was already included and there were not many surprises,” said Nirali Shah, analyst at Samco Securities. “Therefore, you will see some correction to levels of 1,750 rupees in the short term, but the long-term growth trend is still intact for this stock.” Shares closed yesterday at 1,844 rupees.
Deepak Jasani, head of retail research at HDFC Securities Ltd., said the company’s stock earnings this month anticipated announcements at the AGM, and most were in line with investor expectations. The stock added 12% this month through Tuesday.
“We remain positive in the company’s long-term growth plans and would advise investors to hold shares for healthy returns,” analysts at Religare Broking Ltd. wrote in a note. “The new investment in RIL should be made only in dives.”
Launch 5G
An initial release of 5G from Reliance Industries “may potentially trigger another cycle of capital spending, reverting to the balance sheets of telecommunications companies,” wrote analysts at Edelweiss Financial Services Ltd., including Pranav Kshatriya. “We are expecting large-scale commercial 5G launches by operators by 2024-25, and moving to the next 1-2 years is likely to involve significant capital spending.”
“While Reliance JIO’s partnerships with Facebook and Google have created quite a stir, these are limited to select use cases; we would wait and see how it develops. “
Digital roadmap
Initiatives announced at the AGM in conjunction with strategic partnerships have established a “powerful” long-term digital roadmap for Reliance, wrote Aditya Suresh, head of research for India at Macquarie Capital Ltd. in a note. “RIL / JIO’s ability to transform into a technology-focused company and solve India’s trillion-dollar digital opportunity has increased substantially,” he said, increasing the company’s target price by 17% to Rs 1,400.
However, Macquarie maintains an underperforming rating on valuations. “We still don’t see significant sustainable organic FCF generation, even without a potential 5G capital investment cycle, and our earnings for the FY22-23 EPS are 15-20% below consensus,” he said.
(Adds Macquarie’s comments)
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