Reliance gains over 3% as brokerages say stock nearing bear-case valuation after recent correction

Shares of Reliance Industries climbed 3.24% to an intraday high of ₹1,388.5 apiece on the national stock exchange (NSE) on Thursday after analysts at JM Financial said the recent correction in the conglomerate’s stock appears excessive and that the company is now trading close to its bear-case valuation.

The brokerage reiterated a ‘buy’ rating on the stock.

According to the brokerage, the recent weakness in the stock price has been driven largely by macro concerns rather than any deterioration in the company’s core businesses.

Middle East tensions triggered concerns around crude

One of the key factors behind the recent correction has been rising tensions in the Middle East, which pushed crude oil prices higher and sparked fears that refining and petrochemical margins could come under pressure.

However, analysts argue the near-term impact could actually be favourable for Reliance’s refining business.

The brokerage noted that diesel crack spreads have surged to around $35–$42 per barrel from roughly $20 earlier, improving refining economics. Reliance’s refinery configuration has a high diesel yield of around 40–50%, meaning stronger diesel margins can materially boost profitability.

According to the report, every $1 per barrel increase in gross refining margins (GRMs) could add about ₹4,500 crore to the company’s annual EBITDA.

FII selling also weighed on the stock

Foreign institutional investor (FII) selling has also been a key factor behind the decline in Reliance shares.

FII ownership in the company has fallen to 21.1% as of December 2025 from a peak of 28.3% in March 2021, reflecting broader global risk-off sentiment. As one of India’s most liquid large-cap stocks, Reliance often becomes a source of liquidity for global investors during periods of market volatility.

Digital and retail seen driving long-term growth

Looking ahead, analysts expect the company to deliver 14–16% earnings per share growth over the next three to five years, supported primarily by its digital and retail businesses.

Reliance’s telecom arm, Reliance Jio, is expected to benefit from tariff hikes and rising data consumption, with analysts projecting 10–11% ARPU growth and 15–16% EBITDA expansion over the coming years.

Meanwhile, the retail segment continues to expand its store network and invest in quick commerce, although analysts cautioned that aggressive expansion in the segment could weigh on margins in the near term.

Jio IPO seen as key catalyst

Another potential catalyst for the stock is the long-anticipated initial public offering of Reliance Jio, which analysts believe could unlock major value within the group’s fast-growing digital business.

Over the longer term, analysts expect the company’s earnings mix to shift away from energy, with digital and retail businesses projected to contribute the majority of the conglomerate’s EBITDA by FY28.