Reliance Industries Limited is the largest conglomerate in India that has evolved from being a textiles and polyester company to an integrated player across petroleum, materials, retail, entertainment, and digital services. It is further expanding into green energy. Reliance Industries, a Fortune 500 company, was founded by Dhirubhai Ambani and is now promoted and managed by his elder son, Mukesh Dhirubhai Ambani, the richest Indian, thanks to rapid growth in the company’s business under his guidance.
The Reliance share is among the most coveted ones on Dalal Street, especially in the recent months when the crude oil prices have surged, and refining margins are increasing. If you are also among those that want to buy this stock, there are a few things that you should know:
Oil is king
Even though the company has diversified into retail and digital services that are profitable businesses, its oil refining and petrochemical businesses still generate the lion’s share of the revenue and profits. The company operates the world’s largest refinery in Jamnagar, Gujarat. This year the oil business is likely to generate even more cash for the company as refining margins have surged amid the inflation in crude oil prices.
Retail empire
The company’s retail business is the largest in the country and is expanding at a breakneck pace. Reliance Retail has 15,196 physical and operational stores, adding hundreds of them every quarter. In fiscal 2022, the company said annual revenue for retail business was nearly Rs.2 crore. It has also started JioMart, an online marketplace.
Leader in telecom
Jio Flatforms, majority-owned by Reliance Industries, is the largest telecom operator in India, besides providing other digital services. The company said its FY22 earnings revealed that annual revenue for digital services crossed the Rs. 1 crore mark. The average revenue per user has constantly been rising, boosting Reliance’s share price.
Way forward
The company plans to become a carbon-neutral company by 2035. To achieve that,the company is in the process of investing Rs. 75,000 crore in establishing a green energy business, including four Giga factories in Jamnagar. The area integrated a solar photovoltaic module factory, battery factory, and an electrolyser factory for making green hydrogen. It also includes a fuel cell factory for converting hydrogen into power.
Analysts take
ICICIdirect says long-term prospects and dominant standing of RIL in each product and service portfolio provide comfort for long-term value creation. RIL’s consumer business will be the growth driver going forward. The company has a strong balance sheet post fundraising, while its traditional business will generate healthy cash flows owing to a favourable refining scenario in the near term. ICICIdirect has a ‘BUY’ rating with the target price of Rs. 3,050 on the sum of the parts basis.
For a disclaimer and detailed report, click here:
https://www.icicidirect.com/research/equity/reliance-industries-ltd/5961
Originally posted 2022-08-06 00:32:11.
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