Reliance’s stock has troughed at 0.8-0.9x P/B in each of the last three downcycles in refining and petrochems after adjusting book value for revaluations and changes in depreciation policy. Using a similar multiple and adding the value of only its known upstream resources indicates a SOTP of ~Rs1,125/share; this may be a gauge for a relatively safe entry point. With the stock trading only 10% higher, though, we perceive favourable risk reward even at current prices. Reliance’s 25% 2-year EPS Cagr also makes valuations (12.5x Mar09 PE) reasonable.
Do not buy on a day when the indices are up buy only on a day when the market tanks or weak
Do not buy the entire lot one day, stretch your buying and place orders with limits.
Levels to Watch out for
Support 1 - 1200
Support 2 - 1140
Resistance 1 - 1350
Resistance 2 - 1442