From Nomura to Emkay: Brokerages decode RIL 49th AGM fine print

RIL stock will re-rate on a continuous basis as key milestones of transition are achieved, starting with the JIO IPO and subsequently the commissioning of 10 GW integrated solar project, analysts said

Reliance Industries' (RIL) stock gained over 2 per cent in intraday deals on Monday and hit a high of Rs 1,345.45 levels following the company's 49th annual general meeting (AGM) on Friday.

 

Besides giving an account and the roadmap of the future plans, Mukesh Ambani-led company also filed a Draft Red Herring Prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi) for Reliance Jio Infocomm’s initial public offer (IPO). 

 

Here's how leading brokerages have interpreted the fine print of RIL's 49th AGM.

 

Nomura

 

Reliance Intelligence moves from plan to execution, with the Jamnagar sovereign artificial intelligence (AI) hub targeting the first 120MW by end-FY26E. It represents an early-stage, capex-heavy optionality play for Reliance. 

 

 

Jio listing will unlock value of the digital business inside RIL, and opens an entry point for new investors who want to invest exclusively in the telecom business. 

 

We maintain our buy rating on the stock with sum-of-the-parts (SoTP)-based target price at Rs 1,640. Post the potential Jio IPO, new catalysts to look forward to may come from ramp-up of new energy business and revenue contribution starting FY27; growth of the artificial intelligence (AI) business; and potential listing of the Retail business.

 

Emkay Global

 

The next phase of growth in oil-to-chemicals (O2C) business segment will be driven by investments in higher-value chemicals and materials. The 3mmtpa PTA project at Dahej is progressing well and is expected to strengthen RIL's position in the polyester value chain. 

 

The 1.2 mmtpa PVC project at Nagothane is expected to significantly reduce India's import dependence while addressing growing domestic demand from infrastructure, construction, and consumer segments.

 

New Energy business targets were reiterated, with commercialization of the photovoltaic (PV) segment and a meaningful contribution to RIL’s financial performance from FY27. We retain buy rating on the stock and target price of Rs 1,680. 

 

Antique Stock Broking

 

The company has once again outlined a target of more than doubling consolidated earnings before interest, taxes, depreciation and amortization (Ebitda) over the next 5 years, implying EBITDA of Rs 4.2-4.5 trillion by FY31. Achieving this could potentially double the return on capital employed (ROCE) and drive a meaningful re-rating of the stock.

 

We believe Reliance will re-rate on a continuous basis as key milestones of transition are achieved, starting with the JIO IPO and subsequently the commissioning of 10 GW integrated solar project along with 40 GW battery plant this year, followed by the Kutch solar + battery and hydrogen. Reiterate buy rating with SOTP target of Rs 1,670/share.

 

Motilal Oswal Financial Services

 

We expect RJio to remain the biggest growth driver (digital to contribute around 80 per cent of RIL’s incremental EBITDA), with 18 per cent EBITDA CAGR over FY26-28E, driven by the wireless tariff hike (around 15 per cent in Q2-FY27), market share gains in wireless, and the continued ramp-up of Homes and Enterprise offerings. 

 

Overall, we build in a CAGR of around 9-10 per cent in RIL’s consolidated EBITDA and PAT over FY26-28E. We model an annual consolidated capex of Rs 1.25 trillion for RIL over FY26-28E, as we believe the peak of capex in digital services is likely behind, which should lead to healthy free cash flow (FCF) generation (nearly Rs 1 trillion over FY26-28E) and a corresponding decline in consolidated net debt. We reiterate our buy rating on RIL stock with an unchanged target price of Rs 1,655.

 

Nuvama

 

New energy business shall start contributing meaningfully from FY27. Solar module/cell plants operational (scaling to 20GW capacity). We reckon, on 10GW module/cell, it could add 5 per cent to FY26 profit after tax. Reliance Intelligence (RI) / Reliance Consumer Products (RCPL) will be the new growth engines for the company. As regards Reliance Jio IPO, while premium valuation is likely, RIL shareholder gains may be limited by holding company discount. The stock trades at 23x/19x FY27/28E earnings per share (EPS). We maintain a buy rating with a target price of Rs 1,765.

 

That said, a slowdown in global demand or larger-than-expected capacity additions could impact RIL’s refining and chemical margins. Weak natural gas prices could lower the profitability of upstream assets. Our reverse DCF calculation suggests that (especially) for Jio Platforms and Retail, the market is baking-in very high earnings growth expectation sustaining over the next ten years, which – by any measure – is a tall ask.