Reliance Industries (RIL) shares gained almost 2% in early trade on October 30, making it one of the top contributors to the Nifty 50 index. This is after the Mukesh Ambani-led conglomerate reported an increase of nearly 9% in profit and more than 12% in revenue on a sequential basis for the July to September quarter.

Share Market Live

NSE

Following these second-quarter results, several brokerages maintained an optimistic outlook on Reliance Industries. Notably, RIL's oil and gas segment exhibited a staggering 72% surge in revenue, reaching ₹6,620 crore. Reliance Retail also delivered a strong performance, with a quarter-on-quarter revenue growth of 10.3%, amounting to ₹77,163 crore, surpassing the CNBC-TV18 poll estimates.

Furthermore, RIL's telecom division, Jio, reported a 3% sequential growth in consolidated revenue, amounting to ₹24,750 crore, aligning with poll projections.

Jefferies, headquartered in New York, has assigned a "buy" rating to RIL's shares, setting a target price of ₹ 3,000, implying a potential 32.4% increase in the stock price. The brokerage highlighted the notable increase in profitability in the O2C (Oil to Chemicals) segment, driven by refining, and the healthy subscriber additions observed in the Jio division.

However, it noted that the average revenue per user (ARPU) missed expectations due to an unfavorable mix. Jefferies also pointed out that Q2 earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 8% sequentially, slightly exceeding estimates in the retail segment, with retail throughput per square foot rising by 10% quarter-on-quarter, enhancing operational performance.

Despite depressed petrochemical spreads, the brokerage has adjusted its segment EBITDA expectations to 4% and 5% for FY24 and FY25, respectively. It anticipates a 13% EBITDA growth in the current fiscal, making it a favorable risk-reward proposition.

Also Read: Empowering women has been a constant thread in my life': Nita Ambani on gender equality, sports and more

Nomura, too, maintains a "buy" recommendation for Reliance stock, with a target price of Rs 2,925, indicating a potential upside of nearly 30% from the closing price on October 27. The London-based brokerage highlighted healthy growth across all segments, noting strong refining margins in the O2C segment, partly offset by a decline in petrochemicals, while exploration and production (E&P) volumes saw an increase with the commencement of the MJ Field.

Nomura pointed out that although the company's net debt has moderated, free cash flow (FCF) remains negative.

Also Read: Disney said to near multibillion-dollar India deal with Reliance Industries

On the other hand, HSBC recommends holding RIL shares with a target price of ₹ 2,460, implying an expected increase of 8.5%. The brokerage expressed reservations about the outlook for the O2C segment, emphasised that the retail sector's store growth has lagged, and highlighted the capital-intensive nature of the digital business.

At 10:03 a.m., Reliance shares were trading at ₹ 2,298.95 on the BSE, a 1.49% increase from the previous session's closing price.

Catch latest stock market updates on CNBCTV18.com's blog

(Edited by : Akanksha Upadhyay)