Morgan Stanley has reiterated its “Overweight” recommendation for Reliance Industries Limited (RIL), setting a target price of Rs 3,416 per share. The firm’s analysis focuses on RIL’s refining business and its impact on the company’s overall performance.
Key points from Morgan Stanley’s report:
- RIL’s Gross Refining Margin (GRM) outperformance versus benchmark margins is expected to widen further as crude discounts increase.
- The current stock price appears to be pricing in mid-cycle refining margins, while actual margins are currently below this level.
- Refining cash flows remain crucial to RIL’s growth plans.
- Global refining weakness has attracted investor attention.
- Morgan Stanley estimates that a $1 per barrel decrease in refinery margins negatively affects RIL’s cash flow by $0.4 billion.
The analysis suggests that despite current challenges in the global refining sector, Morgan Stanley maintains a positive outlook on RIL. The firm sees potential for improved performance in RIL’s refining business, particularly as crude discounts rise.
Morgan Stanley’s report highlights the significance of RIL’s refining operations to its overall financial health and growth strategies. Investors are advised to consider these factors, along with the sensitivity of RIL’s cash flow to refining margin fluctuations, when evaluating the stock.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.
