The firm said that it sees limited downside to RIL’s earnings and also little value being ascribed to the company's new businesses (e-commerce, green energy, FMCG, financial services and new petrochemical investments) at its current market price.
Jefferies noted that the recent fall in the stock price has been triggered by some key concerns raised by investors like slower growth in the retail segment despite rapid floor space addition, large rise in capex, and rising debt level.
However, it said that RIL will focus on improving the efficiency of this large floor space that should aid growth and operating leverage over the next two financial years.
“We project 30 percent core revenue growth and 25 percent EBITDA (earnings before interest, tax, depreciation and amortisation) growth in FY24E. Capex run rate should peak out over FY23-24E,” Jefferies said in its note dated March 16.
RIL’s net debt-to-equity ratio is also near a 22-year low, indicating that the company’s balance sheet is in a comfortable position to fund growth.
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