Brokerages Bullish on Reliance Industries, 36% Upside Potential

International brokerages Jefferies and Bernstein have reiterated their positive outlook on the chemicals-to-retail conglomerate Reliance Industries Ltd. Both firms emphasized their confidence in the company’s growth trajectory despite recent market corrections and headwinds in key segments.

Jefferies highlighted that Reliance Industries' stock price has corrected by 22% from its 52-week high, making its valuation the most attractive since the March 2020 COVID-19 market crash. The brokerage views this as a favorable buying opportunity, citing an improved risk-reward ratio and growth potential across its diverse business verticals. The correction in the share price is seen as an overreaction to macroeconomic pressures, providing investors with an entry point at significantly lower valuations.

Jefferies anticipates mid-teen growth recovery in Reliance's retail segment by FY26, driven by an expanding product portfolio, store network, and strategic partnerships aimed at capitalizing on India’s growing consumer demand. The brokerage also pointed to the potential listing of Reliance Jio, the telecom arm, as a catalyst that could unlock substantial value for shareholders. Jefferies further projected an improvement in profitability for the company’s oil-to-chemicals (O2C) business, which has historically been a significant contributor to overall earnings. This improvement is expected to be driven by favorable refining margins and the stabilization of global crude oil prices.

According to Jefferies, the cumulative performance of the retail, telecom, and O2C segments is expected to lead to a 14% EBITDA (earnings before interest, taxes, depreciation, and amortization) growth in FY26. In line with this positive outlook, Jefferies maintained its "buy" recommendation on the stock, setting a target price of ₹1,690, which implies a potential upside of 36% from current levels.

Bernstein, on the other hand, maintained its "outperform" rating, assigning a target price of ₹1,520, indicating a 25% potential rally. The brokerage’s optimism is based on a recovery cycle that it expects to begin in 2025, driven by improving performance in the telecom and retail segments, alongside a rebound in refining margins. Bernstein highlighted that the retail segment's growth would be underpinned by the continued expansion of Reliance’s e-commerce and physical store operations, as well as increased customer engagement through loyalty programs and digital offerings.

In the telecom segment, Bernstein projects that Reliance Jio's average revenue per user (ARPU) could rise by 12%, even without tariff hikes, supported by a 4–5% increase in its subscriber base as Jio continues to expand its reach in both urban and rural markets. This growth is expected to be fueled by the ongoing rollout of 5G services and the introduction of affordable 5G-enabled devices aimed at enhancing digital inclusion.

Additionally, Bernstein noted that the O2C business could see a revival in gross refining margins (GRMs), supported by higher demand for transportation fuels and petrochemicals as economic activity picks up. The brokerage emphasized that improving global demand dynamics and supply constraints in some markets could contribute to stronger refining margins, benefiting Reliance Industries.

Both Jefferies and Bernstein view the company’s diversified business model as a key strength, allowing it to mitigate risks associated with individual segments while capturing growth opportunities across sectors. The analysts also highlighted the strategic importance of Reliance's investments in new energy initiatives, such as solar power and green hydrogen, which align with global trends toward sustainability and could provide long-term growth avenues.

Market experts agree that while short-term volatility in crude prices and regulatory challenges could pose risks, Reliance's scale, market leadership, and strategic investments position it well for sustained growth. Investors are closely watching developments related to the potential Jio listing and progress in the new energy segment, as these factors could further boost investor sentiment.

In summary, both Jefferies and Bernstein remain bullish on Reliance Industries' long-term prospects, driven by strong fundamentals and favorable growth catalysts. As the company continues to expand its presence across key sectors, it is expected to remain a dominant player in the Indian and global markets.