CLSA upgrades rating for Reliance Industries to 'outperform'

CLSA upgrades rating for Reliance Industries to 'outperform'Asia Pacific-focused brokerage firm CLSA on Friday upgraded rating for Reliance Industries Ltd (RIL), saying the underweight trade on the company was over.

CLSA upgraded RIL from an 'Underperform' rating to 'Outperform' and also hiked its twelve-month target price for the company's stock to Rs 850 a share.

In a note to clients, CLSA analyst Vikash Kumar Jain said that the adverse conditions like lack of growth and harsh downgrades from valuations drove a 40 per cent underperformance over the past five years, but now those adverse conditions were expected to reverse.

The brokerage firm predicted that expansion in capacity, increase in production, higher gas prices and the company's buyback programme could push the stock higher.

Predicting the company's aggressive buyback programme, Jain added, "Given RIL's cash, weak near-term earnings momentum and likely unfinished buyback quantity we expect the buyback to be extended by a year."

However, the stock is still one notch below the brokerage firm's highest rating - 'Buy.'

In the after-hours trading stock in RIL gained 3 per cent to Rs 791.80 a share.