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Stock Market News: Reliance Industries’ Comeback

Shares of Mukesh Ambani-led Reliance Industries (RIL) surged on the exchange recently, driven by renewed optimism from global brokerages. Jefferies, a leading investment bank, reaffirmed its bullish stance, while Kotak Institutional Equities upgraded the stock, signaling confidence in the conglomerate’s growth trajectory. This rally comes after a prolonged period of underperformance, with RIL’s stock down 21% over the past year—a stark contrast to the NIFTY50’s marginal 1% dip. Currently trading 37% below its July 2024 peak of ?1,608.80, analysts now suggest the worst may be over for the oil-to-telecom giant.

Brokerages Double Down on Growth Potential

Jefferies maintained its "Buy" rating with a base target of ?1,660 (43% upside), citing undervaluation across RIL’s diverse businesses. In an optimistic scenario, the brokerage sees shares soaring to ?1,850 (59% upside), fueled by recovery in refining margins, telecom tariff hikes, and potential value unlocking through Jio’s IPO. Kotak echoed this sentiment, upgrading the stock amid expectations of a turnaround, making it a key pick for investment stock market enthusiasts.

What Drove the Slump?

The underperformance stemmed from dual headwinds:

1. O2C Business Slowdown: Weak global demand, particularly for gasoline in China, dented refining profitability.
2. Retail Segment Stagnation: Store rationalization and B2B consolidation temporarily hampered same-store sales growth.

Catalysts for Recovery

1. O2C Turnaround on the Horizon

Jefferies predicts a 14% EBITDA growth in the oil-to-chemicals (O2C) segment, driven by improving refining margins. With 0.9 million barrels per day of global refinery closures and seasonal demand during the U.S. driving season, margins are poised to rebound.

2. Retail Revival Gains Momentum

After a year of consolidation, Reliance Retail is set for a resurgence. Grocery and electronics sales remain robust, while fashion and lifestyle segments show recovery. Jiomart’s expansion—now offering 40-minute deliveries across 4,000 pincodes—and single-digit area growth in FY26 are expected to drive 15% core revenue growth. Jefferies highlights that current valuations impute just 41–48 bn EV to Retail, far below the 106 billion valuation during ADIA’s 2023 investment.

3. Jio’s Growth Engine Fires Up

Jio’s revenue and EBITDA are projected to grow at 18% and 22% CAGRs, respectively, through FY27. Jefferies notes Jio hasn’t fully realized the benefits of past tariff hikes, and further increases—coupled with fixed wireless access (FWA) adoption—could boost ARPU. With rising free cash flow, Jio’s steady outlook strengthens RIL’s overall valuation.

4. Value Unlocking via Jio IPO

A potential Jio listing could re-rate RIL’s valuation multiples, offering investors clearer visibility into the telecom arm’s standalone worth. This, alongside improved O2C margins and retail expansion, creates a compelling case for rerating.

The Road Ahead: Investment Stock Market Opportunity

While challenges in global energy markets and retail competition persist, RIL’s diversified portfolio and execution capabilities position it to capitalize on cyclical recoveries and structural shifts. As Jefferies succinctly put it: “The worst is done; it’s time for growth.”

With brokerages flagging significant upside and strategic catalysts in play, Reliance Industries may be on the cusp of reclaiming its market leadership. For investors looking to enter the market, choosing the best online trading platforms is crucial for seamless trading.

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