Reliance Industries' (RIL) sustained petrochemical performance has improved the likelihood of O2C stake sale in FY22, said financial services company Jefferies.
Accordingly, Jefferies maintained the 'buy' call on RIL with a target and Rs 2,580 or 30 per cent upside.
"At the current stock price, valuing the energy business at long-term average multiples, we are left with Rs 1,150 per share as imputed value of RIL's stake in 'Jio' and 'Retail'," Jefferies said in a report.
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"This is in line with the valuation offered by PE funds that bought stakes in Jio and Retail in 1QFY21."
Besides, the report pointed out that sustained strong petrochemical performance has improved the likelihood of O2C stake sale in FY22.
"This could lead to a reversal of the 40 per cent Nifty underperformance. Our PT (Rs 2,580) represents 30 per cent upside."
On the off-take front, the report said that sustained demand strength on fiscal support in major economies, commissioning delays in new projects, and vaccination penetration should support polymer margins in FY22E.
"Demand (polymer) underpinned by strength in downstream industries' viz. automobiles, durables, consumer goods, medical supplies, and packaging. Consumer spending in US and China remains strong, e.g., container rate from China to US 50 per cent higher than previous decade high, China imports in 1QCY21 up 55 per cent over 1QCY19."
