In the year 2023, Reliance Industries, the largest private company in India, faced disappointment among its shareholders despite the overall market reaching unprecedented highs. While many stocks, ranging from big to small-medium enterprises, contributed to investor wealth, Reliance Industries struggled to meet expectations. However, the dawn of the new year, 2024, brings a ray of hope for Reliance Industries shareholders as foreign brokerage firm Jefferies recommends buying the company’s stock.
Jefferies’ Optimistic Projection
According to Jefferies’ recent report, Reliance’s stock is anticipated to surge by 21 percent, reaching Rs 3125. Currently trading around Rs 2600 as of January 5, 2024, the stock had experienced fluctuations throughout the past year. On December 30, 2022, the closing price was Rs 2547, and by March 20, 2023, it had fallen to Rs 2180. The stock witnessed a notable recovery on July 19, 2023, reaching Rs 2856 after the demerger of Jio Financial from Reliance Industries. Despite a setback in October, the stock has rebounded by over 12.50 percent in the last three months, closing at Rs 2586 in the final session of 2023.
Challenges Faced in 2023
The performance of Reliance shares in 2023 was subpar, facing various challenges and fluctuations in value. However, Jefferies is now exceptionally optimistic about the stock’s future, aligning with the broader market sentiment that suggests large-cap stocks may outperform in 2024. While midcap and small-cap stocks dominated in 2023, the coming year is anticipated to favor larger, established companies.
Jefferies’ Positive Projections
Jefferies’ report outlines an estimated 13 percent EBITA growth in 2024-25 for Reliance Industries. Additionally, the potential increase in mobile tariffs by Reliance Jio is expected to significantly contribute to the company’s share value. The report further speculates that the capital expenditure of Reliance Jio and Reliance Retail may decrease in the fiscal year 2024-25. This reduction not only mitigates the risk of increased debt for the company but also enhances overall cash flow.
In conclusion, despite the challenges faced in 2023, Jefferies’ bullish stance on Reliance Industries suggests a promising trajectory for the stock in 2024, with potential returns for investors who seize this opportunity.”
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