Reliance Industries (RIL) is expected to build on its retail and fuel refining verticals while new energy and AI are the key for next leg of growth, according to brokerages. RIL on Friday missed analyst estimates for the Q2FY26 as softness in its oil and gas and petrochemical segments tempered gains in refining, retail, and digital services.
“RIL’s earnings should get investor confidence back; re-rating is ahead as consumer retail is turning around and beat estimates,” said Morgan Stanley. Terming that the guidance was optimistic, the brokerage said the setup for the December quarter looked very strong, notably retail and fuel refining. New energy and AI are key for the next $50 billion in value creation, it said.
RIL’s Solar PV giga factory commissioned four module lines and expects to commission its first cell line soon. Giga factories remain on track for completion within 4-6 quarters. Project development on the Kutch site is per timeline and RIL expects to begin commissioning solar generation in the first half of next year, the brokerage house said.
The retail business saw strong momentum riding on quick commerce. The 22% and 23% topline growth in fashion and grocery was a key surprise for the quarter in consumer retail – it comes after an anaemic and bumpy growth for the last year. Consumer electronics also recovered in sales growth to 18% jump y-o-y, it added.
Macquarie Capital Securities said it liked growth revival in retail, up 19% y-o-y, driven by broad-based growth across verticals. Following the results, Macquarie revised its 12-month target price for RIL to `1,650 from the October 16 price of `1,398, projecting an 18.4% rise. Hyper-local commerce scaled up three times y-o-y in daily orders, while Jio added 8 million net subscribers in Q2 to a total of 506 million.
Macquarie also noted progress in RIL’s AI ecosystem and new energy projects, including solar PV and battery energy storage giga-factories, were on track. JM Financial reiterated its buy rating (unchanged TP of `1,700) due to comfortable valuations after the recent weakness and as” RIL’s industry leading capabilities across businesses is likely to drive robust 15-20% EPS CAGR over the next 3-5 years, particularly driven by both consumer businesses.”