Reliance Industries top performer today, rises over 3%; But is it worth investing ahead?

While Indian markets were upbeat in today’s trading session, there was high love seen by investors when it came to trading in Mukesh Ambani’s Reliance Industries. The RIL was the top performer on benchmark Sensex index soaring over 3% by touching an intraday high of Rs 1,263.80 per piece. However, the stock price of RIL finished at Rs 1,259 above Rs 33.20 or 2.71% on the index. 

There is not much known to why the share price of RIL saw such an heavy buying interest from the investors. However, it is being known that on September 04, the company had announced that they have made payment of interest to the holders of Unsecured Redeemable Non-Convertible Debenture - PPD Series C. 

Share price of RIL has been on booming stage. Recently the company once again earmarked the $100 billion company mark following IT-giant Tata Consultancy Service. 

By end of last month, RIL touched a new high of Rs 1,328.75 per piece, giving return of about 70.35% in an year. 

With this blockbuster performance, Chairman Ambani has also seen boost in his net income as now he stands at 13th richest man spot across the world, as per Bloomberg Billionaire Index. Ambani now has a net worth of $46.7 billion. He saw net addition of $6.44 billion so far this year on the back of robust performance of Reliance on the stock exchanges. 

However, with this uptick, one should really ask themselves the question to how far Reliance could go ahead and is it worth investing right now. 

Interestingly, analysts are not much upbeat on the Reliance stock. 

Tarun Lakhotia, Rohit Chordia and Akshay Bhor analysts at Kotak Institutional Equities said, “Our reverse valuation exercise suggests that investors have not only priced in a robust energy segment performance in RIL’s current valuations, but also ascribed the EV of leading players in key sectors that are being targeted by RIL’s platform narrative—Bharti’s India business (telecom), Avenue Supermarts (retail), Flipkart (e-commerce) and key players in the media sector (content ecosystem).”

The trio adds, “The recent sharp rally leaves limited scope for disappointment on that narrative, which may not be ruled out given well-funded competition in key segments. Reiterate SELL.”

Somshankar Sinha and Piyush Nahar, Equity Analysts at Jefferies said, “Reliance's stock has been on a tear adding ~US$30bn in m-cap since end June underpinned by a strong 1QFY19 and renewed optimism in its consumer services businesses. Indeed, telecom sub momentum is strong with RMS also up 275bps q/q to 21.9% in 1QFY19.”

The duo at Jefferies believe this will reflect in rising EPS too, even if they lag Consensus, but capital spend trends should also be sobering too with net liab. also trending higher than most expect.

Jefferies stays on ‘Underperform’ view with a Rs 880 target price.