Street view: Why are analysts bullish on Reliance Industries stock?

Dalal Street analysts have upped their bets on the biggest conglomerate, Reliance Industries Ltd., citing several growth drivers along with a potential valuation re-rating. 

 

The excitement for the oil-to-telecom stock will mostly come from a "notable improvement" across all businesses from the first quarter (Q1) onwards, analysts at CLSA said in a note on June 25.  

Reliance's retail Ebitda is expected to grow in the high-teens year-on-year (Y-o-Y) from the first quarter, driven by streamlining benefits, while Jio added 2.6 million mobile users in April. Gross refining margins (GRM) show a $1.1 per barrel sequential gain, supporting the oil-to-chemical (O2C) segment, CLSA noted. 

 

 

The brokerage has a 'buy' rating on the stock with a target price of ₹1,650 per share.  

 

The primary emerging growth areas are the opportunities in home broadband and enterprise, Citi Research said in a June 24 note. "We also believe that double-digit growth (in telecom) is a long-term, sustainable trend." Better data and 5G monetisation, low smartphone penetration and favourable macros are key triggers.  Citi has maintained its 'buy' rating and increased its target price to ₹1,690 apiece. 

 

Nuvama remains bullish on the conglomerate after its foray into external sales of high-efficiency solar modules and the growth potential of its rapidly expanding New Energy business. RIL had guided for a remarkable surge in the New Energy business with the expectation of its profitability equalling O2C profitability in the next five–seven years, analysts noted. 

 

Nuvama reiterated its 'buy' call but raised its target price to ₹1,801, the second highest on the street, after Mirae Asset Securities' ₹1,950.  

Reliance’s AGM key event to watch out for

Reliance’s AGM, likely in August-September 2025, will be a key event, according to analysts. Updates on JioStar, quick commerce, and FMCG expansion could support the stock’s valuation, CLSA said. 

 

Timelines for new energy projects, including electrolyser and battery facilities, are also expected. Any mention of a potential Jio IPO could be a major trigger.

 

With visibility improving on both profitability and integration in the New Energy vertical, Nuvama urges investors to “watch out for the upcoming AGM in August/September,” which may further flesh out this transformational roadmap. 

Valuation re-rating potential for RIL

Compared to Waaree Energies and Premier Energies, with enterprise values of around $10 billion and $6 billion respectively, Reliance’s fully integrated solar equipment facility could command a significantly higher enterprise value, Nuvama noted.  

 

At 15 times FY27 EV/Ebitda, similar to peers, RIL’s solar module business could be valued at $20 billion, potentially triggering a valuation re-rating, akin to the post-Jio launch in 2017. 

 

The New Energy rollout is expected to boost the bottom line by over 50 per cent and drive a re-rating across segments, including the O2C business, in line with RIL’s net-zero target by 2035, Nuvama said. 

 

Meanwhile, in the retail space, most listed stocks have outperformed the benchmark by 4-17 per cent this year, driven by steady growth, CLSA said. "This, along with the return of strong profit growth from Q1 onwards, should positively rub off on valuations for Reliance Retail."