Shares of Reliance Industries Ltd (RIL) gained 2 per cent in Wednesday's trade and were up for the second straight session after a couple of foreign brokerages suggested a favorable set up for the oil-to-telecom major in 2025. Bernstein finds the risk-reward attractive on the counter as it suggested a target price of Rs 1,520 on the counter.
CLSA also reiterated its 'Outperform' recommendation on the stock with a target price of Rs 1,650. Jefferies, on the other hand, retained its 'Buy' call and set a target price of Rs 1,690. Morgan Stanley finds the stock Rs 1,662-worthy.
"After a $50 billion market cap decline since September 2024 led by 13 per cent EPS cut and a 10 per cent Ebitda cut to consensus earnings, we see Reliance Ebitda has bottomed and can grow 19 per cent-plus in FY26. Valuations are at 3-year low, making risk-reward attractive," Bernstein said on January 7.
The RIL stock rose 2.33 per cent to hit a high of Rs 1269.85. It is up 3.72 per cent in 2025 against a 1 per cent fall for the BSE Sensex. "After notable underperformance in 2024, Reliance Industries’ (Reliance) stock has fallen to a conservative value. We see this as a great entry point to position for attractive gains as triggers play out later in 2025. Persisting weakness in retail profitability has been a big drag for the stock, and we expect the segment to get back to promising growth in 2H25," CLSA said on January 4.
The ramp-up in AirFiber subscribers for Reliance Jio (Jio) as well as another tariff hike are seen driving excitement in the lead up to a potential Jio IPO in late-2025. There are also hopes of the start of new energy projects including integrated solar PV manufacturing in 2025, CLSA said.
Bernstein believes 2025 will see a recovery cycle for Reliance led by Jio ARPU increase of 12 per cent and subscriber growth of 4-5 per cent. It sees retail segment to revert to double-digit Ebitda growth and expects an increase in GRM margins. "We expect earnings growth to be led by Telecom & Retail, while refining margins see a rebound. We update our target price to Rs 1,520," it said.
CLSA said it sees RIL as trading near its rainy-day valuation whereby it assigns the same value as Bharti’s India business for Jio and said the Retail and O2C businesses are at a conservative deal valuation, along with nil value for new energy.
"The stock offers a very attractive risk-reward, in our view. We recommend entry at this bargain price to play triggers like the start of new energy capacity, a return of promising growth from Retail, a ramp up in AirFiber subscribers and a potential Jio IPO later in 2025. We retain our O-PF recommendation," it said.