Brokerages remain bullish on Reliance Industries, saying that O2C expansion and new energy to drive next leg of growth
Shares of Reliance Industries Ltd (RIL) rose over 4% in opening trade on Friday, extending gains for the third straight session, as investors cheered its December quarter earnings report. After two muted quarters, billionaire Mukesh Ambani-led conglomerate reported strong performance in the third quarter of the current fiscal amid recovery in oil-to-chemicals (O2C) and healthy growth in retail led by festive as well as streamlining.
Continuing its gaining momentum, RIL shares gained as much as 4.4% to ₹1,325.10 in the opening trade today. The stock has rallied over 6% in three sessions. At the time of reporting, the country’s most valued stock was trading 2.4% higher at ₹1,299.35, with a market capitalisation of ₹17.54 lakh crore.
Post market hours, Reliance Industries released its Q3 numbers, posting 7.7% YoY growth in its consolidated revenue at ₹2,67,186 crore on strong growth across O2c business, digital services, and retail unit. The consolidated EBITDA increased by 7.8% Y-o-Y to a record high of ₹48,003 crore, while the consolidated profit increased by 11.7% Y-o-Y to ₹21,930 crore even as its capital expenditure stood at ₹32,259 crore in Q3 FY25. As of December 31, 2024, the consolidated net debt stood at ₹115,465 crore, marginally lower against ₹1,19,372 crore in the year ago period.
Brokerages remain bullish on RIL shares
Post Q3 results, most brokerages remained bullish on RIL shares amid attractive valuations, saying that O2C expansion and new energy to drive next leg of growth.
Emkay Global has upgrade RIL to ‘Buy’ from ‘Add’, albeit with a reduced target price of ₹1,570, after Q3 earnings “beat estimates” on operating profit front, driven by retail and O2C businesses, while upstream and Jio performance were “largely in-line”. “We largely retain FY25-27E earnings, while trimming our Sep-25E TP by 6% to ₹1,570 due to 10% cut in Retail multiple. New energy development and vertical monetisation are key triggers for the stock,” it says in a report.
The brokerage house in its report says that the company expects positive near-term outlook for gasoline cracks, on Chinese spring festival and Ramadan in Q4FY25, while diesel could remain supported by heating demand and higher gas prices.
On Jio performance, Emkay says the telecom arm is yet to see the full impact of the tariff hike, while subscriber adds were healthy in Q3, supported by home connections. Now 5G accounts for 40% of its wireless traffic amid the FTTH and AirFiber scale-up.
On retail business, it says the company’s focus is on the tech platform, with supply chain and distribution capabilities (including express deliveries) sustaining growth in the near-to-medium term. The balance sheet remains stable, with cash profit of ₹38,000 crore.
Motilal Oswal has reiterated ‘Buy’ with a revised target price of ₹1,600, from ₹1,550 earlier. “We value the O2C/E&P segments at 7.5x/6x Mar’27 EV/EBITDA to arrive at an enterprise value of ₹436/sh for the standalone business. We ascribe an equity valuation of ₹530/sh and ₹625/sh to RIL’s stake in JPL and RRVL, respectively. We assign ₹47/sh (₹630 equity value) to the New Energy business and ₹26/sh to RIL’s stake in Disney JV (based on transaction value).”
Nuvama has also retained ‘Buy’ call on the telecom-to-oil conglomerate but lowered price target by 8% to ₹1,673, as it ratchet up holding company discount to 20% (from 15%) for consumer businesses as RIL prepares for listing its Jio and retail businesses.
The brokerage house expects RIL to be among top 10 global producers post-petchem expansion, citing its strong growth visibility on expectation of recovery in petchem margins. Adding to it, it expects new energy’s foray to equal O2C’s profits in 5–7 years; adding 50%+ to consolidated PAT and much higher value given clean energy.
YES Securities has maintained ‘Buy’ with a target price of ₹1,500 per share, saying that O2C contributed ₹315, upstream ₹90, and Jio platforms and Retail at ₹442 and ₹660, respectively. New Energy piece adds ₹63 and a reduction of ₹70 of net debt. It expects RIL’s capex over FY25-26e is expected to remain high due to investments in 5G, retail expansion, and new energy projects.
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