Shares of Reliance Industries made another 52-week low of Rs 2,183 during Monday's trading session. The stock is down for the eighth straight day, its longest losing streak since December 2014.

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However, brokerage firm Jefferies believes that the recent correction has brought the stock's valuations to a 6 percent discount to its long-term average price-earnings ratio (P/E).

Jefferies reiterated its buy recommendation on Reliance Industries with a price target of Rs 3,100. The price target has a potential upside of 39 percent from current levels.

The firm said that it sees limited downside to RIL’s earnings and also little value being ascribed to the company's new businesses (e-commerce, green energy, FMCG, financial services and new petrochemical investments) at its current market price.

Jefferies noted that the recent fall in the stock price has been triggered by some key concerns raised by investors like slower growth in the retail segment despite rapid floor space addition, large rise in capex, and rising debt level.

However, it said that RIL will focus on improving the efficiency of this large floor space that should aid growth and operating leverage over the next two financial years.

“We project 30 percent core revenue growth and 25 percent EBITDA (earnings before interest, tax, depreciation and amortisation) growth in FY24E. Capex run rate should peak out over FY23-24E,” Jefferies said in its note dated March 16.

RIL’s net debt-to-equity ratio is also near a 22-year low, indicating that the company’s balance sheet is in a comfortable position to fund growth.

The firm sees little risk to its 7 percent year-on-year operating profit growth estimate in the next financial year. "Falling energy prices have opened up room for removal of export duty that should remove a regulatory overhang," the note said.

Tariff hike, acceleration in retail throughput and removal of export duty and China's demand recovery are triggers for any potential upside.

Shares of Reliance Industries are trading 1.3 percent lower at Rs 2,194.25.

(Edited by : Rukmani Krishna)

First Published:Mar 20, 2023 11:59 AM IST