RIL shares experienced a notable decline of nearly 1 percent during Tuesday’s trading session, as investors reacted to the company’s second consecutive quarter of underwhelming results. Reliance Industries Ltd (RIL), one of India’s largest conglomerates, reported weaker-than-expected performance in its key business segments, including refining, petrochemicals, and retail.
The primary factor contributing to the decline in RIL shares was the weak performance of the company’s refining and petrochemical (petchem) business. Lower refining margins and narrower petrochemical spreads put pressure on the standalone numbers, leading to weaker overall results. While Reliance Retail, another key division, saw improved margins, the revenue growth was less impressive than expected. RJio, RIL’s telecommunications arm, also faced challenges as the benefits of recent tariff hikes were largely offset by higher subscriber churn.
As a result of these factors, several brokerages adjusted their outlook on RIL shares, with some lowering their target prices for the stock. The performance of RIL in the upcoming quarters is expected to be closely watched by investors, as the company navigates these challenges in its core businesses.
RJio to Drive RIL’s Ebitda Growth: MOFSL’s Outlook
Motilal Oswal Financial Services Limited (MOFSL) remains optimistic about RIL’s long-term outlook despite the recent dip in its share price. According to MOFSL, Reliance Jio (RJio), the telecommunications subsidiary of Reliance Industries, will be the primary driver of Ebitda growth over the next three years. MOFSL projects that RJio will lead RIL’s earnings growth through FY24-27, driven by more frequent tariff hikes, increased market share in the wireless segment, and the expansion of its Homes and Enterprise businesses.
RJio has been a major growth engine for RIL since its launch, revolutionizing the telecom industry in India with its aggressive pricing and rapid expansion. According to MOFSL, RJio is expected to benefit from future tariff hikes, which will contribute to higher revenues and margins. Additionally, RJio’s efforts to capture more market share in the wireless segment and its expansion into new areas, such as home broadband and enterprise solutions, are likely to boost the company’s financial performance.
In addition to RJio’s promising outlook, MOFSL expects a recovery in Reliance Retail, RIL’s retail arm. After a recent phase of rationalizing unprofitable stores and streamlining its B2B operations, Reliance Retail is expected to see growth driven by an increased footprint, the introduction of new product categories, and a potential entry into quick commerce. The quick commerce market has been gaining traction in India, and if Reliance Retail enters this space, it could provide a significant boost to its growth trajectory.
MOFSL has revised its target price for RIL shares to Rs 3,255 from its earlier target of Rs 3,410. This revision reflects the firm’s updated valuation of RIL’s standalone business, which it values at 8x Dec’26E EV/Ebitda. MOFSL assigns a value of Rs 1,001 per share for RJio, Rs 1,319 per share for Reliance Retail, and Rs 89 per share for RIL’s New Energy business. These valuations underscore MOFSL’s confidence in RIL’s ability to generate long-term value, despite the near-term challenges.
Brokerages Adjust Target Prices for RIL Shares Amid Mixed Results
As RIL shares continue to trade under pressure, several brokerages have updated their price targets for the stock. Antique Stock Broking has made downward revisions to its FY25, FY26, and FY27 Ebitda estimates for RIL by 3.6 percent, 3.5 percent, and 3.3 percent, respectively. This adjustment is primarily due to a weaker-than-expected retail performance in FY25 and a softer outlook for RIL’s Oil-to-Chemicals (O2C) business over the next two years.
Antique Stock Broking has also lowered its EV/Ebitda multiples for RIL’s fashion and lifestyle business, reducing it from 32 times to 27 times. Similarly, the multiple for the grocery business was cut from 28 times to 22 times. Despite these downward revisions, Antique Stock Broking has maintained a HOLD rating on RIL shares. The firm has set a revised sum-of-the-parts (SoTP) target price of Rs 2,846 per share, down from its previous target of Rs 3,194.
Meanwhile, HDFC Institutional Equities has retained its target price for RIL shares at Rs 3,350. The firm continues to see long-term potential in RIL’s diversified business model, with growth expected across its key segments, including refining, retail, and telecommunications.
Nuvama, another brokerage, is even more bullish on RIL’s prospects. The firm has set a target price of Rs 3,650, highlighting the significant potential of RIL’s New Energy business. RIL’s ambitious foray into green energy and renewable technologies is seen as a key growth driver for the company in the coming years. The New Energy division, which includes investments in solar, hydrogen, and other clean energy technologies, is expected to position RIL as a major player in the global energy transition.
RIL shares were trading at Rs 2,726 on the Bombay Stock Exchange (BSE), down 0.7 percent during Tuesday’s session. Over the past month, the stock has declined by 7.61 percent, reflecting investor concerns over the company’s recent financial performance.
In conclusion, while RIL shares have faced short-term pressure due to weaker-than-expected results, the long-term outlook remains positive, particularly with the growth potential in RJio, Reliance Retail, and the New Energy business. Investors will continue to monitor how RIL navigates these challenges and capitalizes on its growth opportunities in the coming quarters.
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