Reliance Industries chairman Mukesh Ambani addressed shareholders at the annual general meeting on Friday. From capital expenditure to expanding the oil-to-chemicals business and making arrangements for listing Jio platforms, the company detailed a host of growth drivers. The stock price fell immediately after the IPO date announcement and is still under pressure, as the street had priced in most of the news shared at the AGM.
But what’s the outlook for the stock going forward? Here’s a detailed analysis of what different brokerages expect, in terms of the share price movement as well as the growth trajectory going forward.
Nuvama on Reliance Industries: Strong digital and retail outlook, with huge O2C expansion
Nuvama Institutional Equities has a Buy rating on Reliance Industries, with a target price of Rs 1,733, implying an upside of 28% from current levels for the RIL share price. Reliance Industries at its AGM guided for New Energy (NE) profits equalling O2C in five–seven years. It also expects a strong Digital and Retail outlook, and huge O2C expansion.
By 2032, Reliance Industries targets 3MMTPA of Green Hydrogen (GH2) capacity (equalling existing global capacity, requiring 75GW of renewable energy), 3GW electrolyser, which is 50% of global capacity, and 40GWh battery facility scalable to 100GWh.
Reliance Industries’ power consumption/generation to rise to 100GW, which is 2.7 times India’s FY25 renewable energy generation. The company is targeting 25% in power cost savings.
“Reliance Intelligence (RI) and Reliance Consumer Products (RCPL) shall be new growth engines,” said Nuvama.
Motilal Oswal on Reliance Industries: Jio’s valuation
Motilal Oswal valued Jio Platforms at an Enterprise value of Rs 13.3 lakh crore ($151 billion), based on the enterprise value of 13.5 times for September 2027. This implies an overall equity value of Rs 11.9 lakh crore ($135 billion) for Jio platforms. Further, coming down to Rs 585/share attributable to Reliance Industries.
Based on our valuation and SEBI’s recent proposal for reducing the stake dilution limit to 2.5%, Jio Platform’s IPO could be the largest in India, with a size of Rs 30,000 crore. “We believe the value creation through the JPL IPO could offset the negative impact of a theoretical holding company discount for RIL’s stake in JPL,” said Motilal Oswal.
Motilal Oswal expects that an annual consolidated capex of Rs 1.3 lakh crore for Reliance Industries over FY25-28, as the moderation in Reliancce Jio capex is likely to be offset by higher capex in New Energy forays. However, the brokerage stated that the peak of capex is behind, which should lead to healthy free cash flow generation of Rs 1 lakh crore over FY25-28, and a decline in consolidated net debt.
JM Financial on Reliance Industries: RIL to lead industry across businesses
JM Financial maintained its Buy rating on Reliance Industries, with a target price of Rs 1,700, implying an upside of Rs 25%. The broker stated that it expects Reliance Industries to have the capabilities to lead the industry across businesses to drive a robust 15-20% EPS CAGR over the next 3-5 years. The EPS growth, particularly driven by both consumer businesses with Jio’s ARPU, is expected to rise at a 13% CAGR over FY25-28. The ARPU is on a structural uptrend given the industry structure, future investment needs, and the need to avoid a duopoly market.
Talking about oil-to-chemicals, Reliance Industries reiterated its Rs 75,000 crore oil-to-chemicals expansion plans for investing in various existing and new petchem chains.
Also, the company emphasised that the New Energy business would be as big as the oil-to-chemicals business in the next 5-7 years. Adding to that, the Green Energy Giga complex and related projects are progressing at a rapid pace.
“It also reiterated its 2022 AGM announcement of more than doubling RIL’s EBITDA by the end of RIL’s Golden decade in 2027 (RIL’s EBITDA was Rs 1.25 lakh crore in 2022 when this announcement was made),” pointed out JM Financial.
