Shares of Reliance Industries Ltd (RIL) experienced a significant rally on Monday, climbing 6% in trade and marking its most substantial single-day gain in nine months. This surge added an impressive ₹86,405 crore to the company's market capitalization, pushing it to ₹16,60,983.80 crore intraday.
Goldman Sachs Sets Aggressive Target Amid Brokerage Optimism
The share price jump followed RIL's September quarter results, which led to a consensus 'Buy' rating from several prominent brokerages. Goldman Sachs, notably, issued the highest target price on the Street for RIL at ₹1,840, suggesting a potential upside of 58% for investors over the next 12 months. Other financial institutions like Citi, Jefferies, and Nomura also expressed strong upside potential for the stock, though Avendus Spark offered a more conservative 'Add' rating with a ₹1,280 target.
Q2 Performance: O2C and Jio Drive Growth, Retail Sees Softness
Analysts highlighted key drivers behind RIL's robust Q2 performance. Emkay Global reported that RIL's consolidated EBITDA and adjusted profit exceeded expectations by 8% and 10% respectively. This was primarily fueled by a 48% sequential increase in the oil-to-chemicals (O2C) segment's EBITDA, attributed to improved refining margins and enhanced gasifier performance. The petchem sector also saw higher deltas and ethane intensity.
Jio, RIL's telecom arm, continued its steady trajectory, beating EBITDA estimates by 1% due to better Average Revenue Per User (ARPU) and margins. However, the Retail segment showed some weakness, with revenue up only 1% year-on-year and EBITDA down 10%. This was largely due to a festive season mismatch and ongoing investments in digital commerce and quick commerce build-out, according to Emkay and Jefferies.
Future Outlook: New Energy and Valuations
Looking ahead, Nuvama Institutional Equities emphasized the accelerated operationalization of RIL's New Energy projects, with management guiding for earnings contributions starting from FY28. Plans include 6/5GW of solar modules/cells becoming operational, with full 20GW capacity expected by early next year. A 40GWh Battery Energy Storage System (BESS) is slated for FY27, scalable to 120GWh, alongside significant transmission line capacity additions.
"At 10GW capacity, RIL could add 5% to PAT," Nuvama stated, also noting that "captive power cost shall fall by 25%, adding 5% to PAT."
Despite some short-term challenges in the Retail segment, brokerages like Emkay anticipate a recovery in the ensuing quarters as festive demand picks up. Jefferies maintained its 'Buy' rating, stating that RIL's stock currently trades at valuations suggesting "maximum pessimism," implying significant potential for upside as the market re-evaluates its prospects.