RIL Growth Vision Doesn't Change Analysts' View On Downside Risks

Reliance Industries Ltd.'s guidance for double growth in the next five years on the back of growth in telecom, renewable and retail segments did not change analysts' view on the downside risks.

The commentary from Chairman Mukesh Ambani in RIL's 47th annual general meeting on Thursday did not change Macquarie's stance on downside risks to the company's consensus earnings-per-share estimates of Rs 135–140 for financial year 2025–26, the brokerage said in a report.

It said that compared to sum-of-the-part value unlocking, premium value for the parts is already embedded. The brokerage kept its 'neutral' rating on the stock and target price unchanged at Rs 2,750 apiece, which implied a 9.63% downside from the previous closing price

Goldman Sachs cut the price target to Rs 3,415 from Rs 3,430 apiece, and kept its rating 'buy'. The target price implied an upside of 12.3%. The target price is based on the SOTP value.

The New York-based investment bank said RIL has a potential to outperform Indian markets during the period of capital return on capital-invested expansion.

RIL's expectation of doubling revenue and Ebitda of Reliance Jio Infocomm Ltd. and Reliance Retail Ltd. in the next three to four years, and matching renewable energy and petrochemical businesses profits are ambitious, BofA said in a report on Thursday.

The brokerage maintains a 'buy' on the stock and target price at Rs 3,445, which implied a 13.23% upside. BofA maintains the status quo as there is no visibility of near-term value-adding events, and will keep on focusing its business fundamentals.

Meanwhile, no updates on initial public offerings of Reliance Retail and Reliance Jio came as a dampener for investors, analysts noted.

Most brokerages kept their rating and target price unchanged following the announcements. Emkay Global Research kept its earning estimates for RIL unchanged and expects a possibility of valuation increase of 15–20% following the commentary.

Emkay Global Research has an 'add' rating on the stock, with a target price of Rs 3,335 per share, which implied a 9.64% upside from Wednesday's closing price.

Strong guidance for its digital, retail, and huge petro-chemical capacity adds to drive fresh growth, Nuvama said in a report on Friday. The brokerage has a 'buy' rating on the stock and a target price of Rs 3,786 per share, which implied an upside of 24%.

Jio and Reliance Retail are expected to double its revenue and Ebitda margin in the next three-to-four years, Motilal Oswal Financial Services Ltd noted in a report.

Reliance Retail will likely benefit from growth in grocery, fashion, jewellery, electronics, and beauty segments. It will also enter into the luxury jewellery segment, Motilal Oswal said. The brokerage has a 'buy' on the stock with a target price of Rs 3,435 per share, which implies a 13% upside.

RIL's renewable energy business will reach profitability of oil to chemicals in the next five to seven years, the management said. The company is Nomura's top pick in India's energy segment.

The brokerage has a 'buy' rating on the stock with a target price of Rs 3,600 apiece, which implied 20.12% upside from Thursday's closing price. It sees robust growth across segments, which will drive three years of operating profit at 3% CAGR. It will further drive free cash flow generation, and decrease net debt level of the oil to telecom conglomerate.

RIL's shares rose as much as 1.24% to the highest level since July 19. They erased gains to trade 0.25% lower at Rs 3,033 per share as of 09:42 a.m., compared to a 0.39% advance in the NSE Nifty 50.

The stock gained 25.96% in the last 12 months and 17.27% on a year-to-date basis. The total traded volume so far in the day stood at 0.73 times its 30-day average. The relative strength index was at 55.42.

Out of 36 analysts tracking the company, 25 maintain a 'buy' rating, eight recommend a 'hold' and three suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 8.5%.