Analysts’ Call Tracker: The Growing Optimism Surrounding Reliance Industries Ltd (RIL)
Reliance Industries Ltd (RIL), India’s largest conglomerate, has experienced a significant shift in analyst sentiment over the past quarter following a correction in its stock price, as reported by Moneycontrol’s December analyst call tracker.
In December, the stock received 33 “buy”, three “hold”, and three “sell” recommendations from brokerages, compared to 25 “buy”, eight “hold”, and three “sell” calls in the previous quarter.
This change in perspective comes after RIL’s shares dropped nearly 20 percent from their peak in July. Analysts now see this underperformance in 2024 as an opportunity, with the stock trading at an attractive valuation that offers a strong entry point for potential gains as key catalysts unfold in 2025.
Global brokerage firm Goldman Sachs has pointed out that the 15 percent decline in RIL’s stock since October 2024 (compared to a 7 percent drop in the BSE Sensex) seems excessive. The brokerage believes the stock is now trading near its worst-case scenario, which considers lower refining margins, weak telecom ARPU growth, and limited market share expansion in retail. Goldman has reaffirmed its “buy” rating and increased its target price by 26 percent to Rs 1,595 per share.
CLSA has recognized that ongoing challenges in retail profitability have been weighing down the stock, but they anticipate a strong recovery in the second half of 2025. This positive outlook is fueled by the increasing number of AirFiber subscribers for Reliance Jio, the full impact of recent tariff hikes, and the possibility of additional hikes leading up to a potential Jio IPO in late 2025. CLSA has upheld its outperform rating with a target price of Rs 1,650, signaling a potential upside of 32 percent.
Analysts have identified several key catalysts for RIL in FY26, such as the anticipated return to mid-teens growth in retail, a potential listing of Jio, and an improvement in O2C profitability as it bounces back from cyclical lows. Additionally, valuations are attractive, with RIL trading at 9.7x forward EBITDA, the stock’s most affordable level since the Covid correction.
Jefferies forecasts a 14 percent EBITDA growth for FY26, driven by a 17 percent increase in retail and a 23 percent growth in Jio. The brokerage has upheld its buy recommendation with a target price of Rs 1,690 per share.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.