Will Reliance make a splash despite expensive crude? Brokerage gave a target of strong rise of 22%

On one hand, the ongoing fluctuations and rising prices of crude oil in the global market have increased the concern of oil companies around the world, on the other hand, a big and positive news is coming out about the Indian market giant Reliance Industries Limited (RIL). Market experts and leading brokerage houses believe that the rising prices of crude oil in the current financial year will not put a brake on the earnings of Reliance, rather the company may perform better than expected in the coming quarters. On the basis of this strong outlook, the brokerage has given a strong advice to invest in the stock with a bumper upside potential of more than 22% from the current levels. Why Reliance’s position is strong amid crude oil inflation? Generally, rising crude oil prices put pressure on the margins of companies that are involved in the business of oil refining and petrochemicals (O2C). However, the business model of Reliance Industries is no longer limited to oil only, but it has become a huge oil-to-telecom and retail group. According to the reports of brokerage firms, the company’s Gross Refining Margin (GRM) is improving and Reliance’s refineries are directly benefiting from the strong demand for diesel and gasoline globally. Additionally, the company has recently made the operations of its oil-to-chemicals business more modern and cost-effective, which will significantly reduce the impact of expensive crude. Earnings will get a real boost from Jio and retail business. Market analysts also say that even if there is some pressure in the O2C segment due to crude oil, it will be easily compensated by Reliance’s two strongest consumer businesses – Reliance Jio and Reliance Retail. Jio’s average revenue per user (ARPU) is continuously increasing and the company’s profit margin has strengthened due to increase in data consumption after 5G rollout. Similarly, due to the festive season and improvement in demand in rural areas, record earnings are also expected from Reliance Retail’s stores. This is why analysts seem completely bullish on this stock. Big claim of brokerage and earning opportunity for investors. Global and domestic brokerage houses have maintained their ‘BUY’ rating on the stock of Reliance Industries and have set a new target price for it, which is about 22% above its current market price. Even on technical charts, the stock looks ready to bounce back from its important support levels. In such a situation, market experts say that for investors who want to add a safe and consistent return giving large-cap stock to their portfolio for the long term, this can prove to be a great opportunity to buy in this fall.