Some analysts attribute the outperformance in RIL shares to continued optimism about the company's plans to start 4G phone services in December. Speaking at the company's annual meeting of shareholders, Mukesh Ambani, India's richest man, said the Reliance Jio will initiate a test launch over the next few months.
Two brokerages have recently retained their "buy" call on RIl citing optimism about the company's refining business. Global investment bank UBS on Wednesday retained its "buy" rating on RIL with a 1-year target price of Rs 1,154. The brokerage expects RIL to post strong Q1 earnings on the back of strong gross refining margins.
Earlier, Kotak Institutional Equities also retained its "buy" on Reliance Industries (target Rs 1,050) noting (1) robust earnings accretion from core-business projects and (2) recent strength in Asian refining as well as petrochemical margins.
Refining margins are expected to be $8.8/barrel in FY16, $10.8/barrel in FY17 and $10.9 /barrel in FY18 versus $8.6/barrel in FY15, Kotak said.
Rahul Srivastava of Sharekhan noted that for most of the time markets were going up, but RIL was falling. Now, it's the reverse, he said.
However, TS Harihar of HRBV Client Solutions said uncertainty continues around RIL. "Reliance Jio and Reliance Retail are fine, but they are large gestation businesses... The core business is doing okay, but it is cyclical," he added.
As of 12 p.m., RIL shares traded 3.6 per cent higher at Rs 964.45 as against 1 per cent gain in the broader Sensex.
