The Refining and petrochemical business segments of the company is doing very well. The underperformance on its exploration business is expected to get better soon, thanks to the recent deal with British Petroleum. Also the lower gas production from KG basin is expected to get better in next one year which will be a big sentiment booster for the stock.
On the valuation side, at the current market price of around Rs 900,
the stock is available at around 13 times its FY-12 EPS and around 11 times its FY-13 EPS.
the stock is available at around 13 times its FY-12 EPS and around 11 times its FY-13 EPS.
On the performance side the stock has been underperforming since last three years. On three year basis the stock has given a return of -32%. Technically the stock has takes support below 900 levels many times and has bounced back to 1000+ levels in the past. Also being the largest company of India, there is a natural demand of ownership which is expected to protect the stock on the downside.
So considering the undervaluation of the stock vis-a-vis the market and its underperformance in the recent past, investors can keep accumulating Reliance Industries on dips below 900 levels with a target close to Rs 1100 in 1 year.
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