RIL: Goldman Sachs Highlights Path to Rebound Amid Market Stagnation

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RIL: Goldman Sachs Highlights Path to Rebound Amid Market Stagnation

) Limited shares have recently stagnated despite peers in telecom, retail, oil-to-chemical, and new energy sectors experiencing rallies. Goldman Sachs ' latest analysis shows RIL's current 19% discount to its Net Asset Value is the widest since January 2021. This widening gap may stem from declining Singapore refining margins and a slight earnings miss in the fourth quarter.

Now's the perfect time to seize the opportunity! For a limited time, InvestingPro is available at an irresistible discount of 69%, priced at just INR 216/month.The investment bank is more optimistic than consensus on medium-term earnings from RIL's oil-to-chemical segment. The recent dip in refining margins is expected to be short-lived, with global refining supply-demand projected to stay tight through 2027 due to slowing capacity additions and potential permanent closures.

A potential new energy giga complex could start in the second half of 2024. This project is expected to begin with a 5GW HJT solar module line, expanding to a fully integrated 20GW capacity by FY27. Goldman Sachs highlights the limited investment alternatives in India’s upstream new energy sector, making this a significant growth opportunity for RIL.

Goldman Sachs has adjusted its EBITDA forecasts for FY25, FY26, and FY27 by -2.2%, -0.4%, and -0.3% respectively, due to changes in refining margins. RIL is still valued on a Sum-of-the-Parts basis: 8.0x FY26 EV/EBITDA for refining and petrochemical, 33.0x FY26 EV/EBITDA for offline retail, and a Discounted Cash Flow valuation for the high-growth TMT business. Consequently, the 12-month SOTP-based target prices are slightly reduced to INR 3,420 from INR 3,435 .

 

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