The global brokerage Morgan Stanley has reiterated its “Overweight” rating to Reliance Industries (RIL), pegging a target price of Rs 1,617 per share. This translates to a potential 7% upside from the current levels. According to the brokerage report, the company’s reinvention path lies in two key future forward themes, that is, New Energy and Artificial Intelligence (AI).
Morgan Stanley on RIL: Reinvention through AI and clean energy
As per the brokerage report, RIL is preparing for a transformational shift by betting big on AI infrastructure and green energy. The company is building one of India’s most ambitious Gen AI ecosystems in Jamnagar, which is expected to be operational within two years. This initiative includes plans to power 1GW of data center capacity using NVIDIA’s Blackwell chips.
Furthermore, the brokerage firm estimates that such a facility would need approximately 678,000 B100 chips, out of which 135,000 chips might be used internally if RIL reserves 200MW for its own operations.
“India could become an alternative data center hub with RIL providing some of the infrastructure,” the report noted.
Morgan Stanley on RIL: Retail, telecom and energy business expanding
The brokerage house further in its report noted that RIL’s traditional businesses remain strong contributors. The Oil-to-Chemicals (O2C) vertical is expected to see earnings growth of 13% CAGR between FY25 and FY28. Morgan Stanley expects fuel margin gains to support near-term earnings, despite some impact from maintenance work.
On the retail front, the brokerage notes, “Reliance Retail should show 17% top-line growth in F26. Traction in new fashion brands, in-house consumer brands, and quick commerce are key catalysts.” Meanwhile, the telecom arm is expected to add 6.5 million subscribers quarter-on-quarter with a modest increase in ARPU.
Overall, RIL’s consolidated EBITDA is projected to grow 16% YoY, with consolidated earnings expected to jump 27% YoY in Q1FY26.
Morgan Stanley on RIL: Green Hydrogen and Battery Expansion on the horizon
Apart from this AI and data Centers, the company is also making headway in the green energy ecosystem. As per the brokerage report, the New Energy vertical has already begun with a 1GW solar line and aims to scale up to 10GW by the end of 2026.
Morgan Stanley report added that the company is “focusing on reducing cost by building scale in producing green hydrogen” using NEL’s electrolyzers across 2,000 acres near Kandla, a port town in Gujarat. Furthermore, the report also noted that the company is also expected to expand its lithium iron phosphate battery capacity, adding another layer to its clean energy.
Morgan Stanley on RIL: Valuations
The brokerage firm forecasts a 14% CAGR in earnings from FY25 to FY28. This is due to momentum across all verticals such as O2C, retail, telecom, and new energy. The report outlines several valuation multiples for different segments. This includes-
O2C and Petrochemicals: Valued at 7.5 times EV/EBITDA
Retail: Valued at 33 times FY27e EV/EBITDA
Digital Investments (Jio Platforms): At 13 times EV/EBITDA
New Energy: Valued using a Price-to-Book multiple of 3 times
The brokerage values RIL’s investments at a discount of around 40%, and listed holdings at a 25% discount to current value. Its bull case target stands at Rs 2,034 per share, while the bear case is Rs 1,210 per share.