BofA Securities, a financial services company, has issued a list of 10 stock recommendations for the July-September 2023 quarter in the Asia Pacific region. Among these recommendations, Reliance Industries stands out as a top pick. BofA Securities has given a ‘Buy’ rating for Reliance, citing the company’s telecom subsidiary, Jio, as a key driver of its success.
According to BofA Securities, Jio has become the leading player in the Indian telecom market, attracting a large number of paying subscribers. The service quality perception continues to improve, and data demand appears to be consistent and less price sensitive. The financial services company also highlights Reliance’s major petrochemicals expansion, which is expected to significantly increase its free cash flow potential. The continued improvement of Jio and the generation of free cash flow are expected to drive upside for Reliance Industries.
Additionally, BofA Securities believes that Reliance has room to gain market share in the 5G sector, primarily at the expense of Vodafone Idea. The company’s investments in fiber broadband and digital initiatives could also lead to better-than-expected revenues. Moreover, Reliance’s foray into high-margin niches like chocolates, cosmetics, and beverages through acquisitions is seen as a positive move.
Furthermore, BofA Securities notes that Reliance’s oil-to-chemical business is well positioned to generate a significant amount of EBITDA (earnings before interest, taxes, depreciation, and amortization) for the next three years, providing cash-flow stability.
In terms of clean energy, BofA Securities considers Reliance to be one of the few Indian companies with the potential to excel in this field, particularly in solar, battery, electrolyzer, and fuel cells. The company’s efforts in setting up gigafactories further support its position in the clean energy space.
Overall, BofA Securities has maintained a ‘Buy’ rating for Reliance Industries, stating that the risk-reward ratio is favorable, especially as the company heads into its Annual General Meeting in August.
It is important to note that the report also included other recommendations, such as ‘Buy’ ratings for E Ink, Hundsun, Japan Airlines, Mazda Motor, PICC Group, Samsung F&M, SBI Cards, and United Breweries. However, an ‘Underperform’ rating was given for IDP Education.
BofA Securities emphasized that the list of quarterly stock recommendations is based on stocks with the most significant market and business-related catalysts in the upcoming quarter. It aims to identify high-impact ideas and opportunities for investors.
With Reliance Industries being regarded as a top pick, investors will be keeping a close eye on the company’s performance and strategic moves in the market.
