RIL’s investments of $80 billion across its key verticals since the pandemic will start delivering returns from 2026, said international brokerage Morgan Stanley.
Quarterly Roadmap for Earnings Upgrades in 2026
Morgan Stanley expects a re-rating and earnings upgrades of Reliance Industries (RIL) to be triggered in every quarter in 2026 due to the refining up-cycle in Q1, an ARPU hike and retail top-line growth in Q2, ramp-up of new energy in Q3, and a recovery in chemicals confidence by Q4.
The brokerage reckoned that RIL’s fourth monetisation cycle in 30 years – with energy, consumer, and telecom investments are turning free cash flow (FCF) positive for the first time, allowing RIL to redeploy capital into new growth opportunities such as artificial intelligence (AI) infrastructure, energy storage, and polysilicon. Morgan Stanley said this shit is critical for a re -rating of the stock.
It added that RIL outperformed the Sensex by 35 percentage points during its previous two monetisation cycles between 2017 and 2019, and again between 2020 and 2021.
Morgan Stanley said it is seeing “golden age” for refining, creating $7 to 10 billion in NAV. RIL’s fuel refining margins are tracking near $14/bbl (including fuel retail) – i.e., 1.5x above mid-cycle levels as this golden age rolls on into its fourth year in 2026. Globally, diesel margins have rallied over 30% as underinvestment in new global refining capacity combines with disruptions in existing infrastructure, which have become more frequent in the past few years, it said.
“We see 5-7% upside risk to RIL’s F27-F28 earnings as new fuel refining capacity adds lag 0.7-0.9mbpd annual global consumption growth by more than half. Telecom should add a further boost to FCF(free cash flows) as ARPU rises at a 9% CAGR in F26-F28, broadband subscriber numbers outperform, and Gemini 3 AI offering supports subscriber switch from 4G to higher-priced 5G, while capital intensity halves,” it said.
Digital Cash Cows and the FMCG Expansion
It said RIL’s consumer brand business has quickly scaled to a level near that of peers like ITC’s FMCG business in about three years of operation, with over 75% of trade from general merchandise” We expect the FMCG business to be margin- and ROCE- accretive for RIL Retail as it scales up. Ramp-up in consumer brands and quick hypermarket business should further support a move in RIL’s retail growth back to a 17% CAGR in F25-28, it said..
Ternibg digital and telecom vertical turning into a cash cow, it saidRIL’s telecom vertical is turning FCF-positive for the first time as investments slow, subscribers (both broadband and wireless) grow faster than the industry, and ARPU increases organically despite no tariff hikes in the past two years. “We expect RIL to show a similar inflection as Jio Platform achieves a 9% CAGR in ARPU, leading to 18% growth in EBITDA and earnings . However, telecom ROCE remains near 7% with its spectrum assets and digital assets still in the early stages of monetisation. Digital EBITDA, however, has grown 1.5x based on 1HF26 run rate,” it said..
RIL’s margins have decreased by more than a third in this chemical down-cycle, but we see upside risk to Street estimates as margins rise 10-15% by end- 2026. RIL is also improving its margins by increasing cheap US ethane feedstock imports by 50% and expanding PVC capacity in the undersupplied Indian market,it said.