Synopsis: The share of this company gained attention after JPMorgan maintained an Overweight rating, citing strong O2C fundamentals, attractive valuations, and New Energy-led growth prospects through FY27.
The article outlines JPMorgan’s positive view on Reliance Industries, a diversified conglomerate in O2C, retail, telecom, and new energy, driven by strong refining spreads, attractive valuations, and New Energy growth catalysts.
With a market capitalization of Rs 17,46,651 crore, Reliance Industries Ltd’s shares closed at Rs 1,291 per share, down by 1 percent. The share of the company gave a negative return of 10.47 percent over the last year.
Brokerage View
JPMorgan maintains an Overweight rating on Reliance Industries with a target price of Rs 1,660, implying 28.5 percent upside from current levels, supported by strong O2C performance and New Energy catalysts.
Rationale
JPMorgan remains positive on Reliance Industries, expecting the company to benefit from continued strength in refining and petrochemical spreads along with a weaker Indian Rupee. These factors are likely to support earnings growth in its Oil-to-Chemicals (O2C) business over the coming quarters.
The brokerage also believes Reliance’s valuation remains attractive despite its recent performance. It sees the commissioning and ramp-up of the company’s New Energy businesses as a key catalyst that could drive investor interest and earnings growth through FY27.
According to Reliance’s FY26 Annual Report, headline capital expenditure stood at Rs 1.4 trillion, up 10 percent YoY. However, capital expenditure reflected in cash flows declined 11 percent YoY to Rs 1.2 trillion, which JPMorgan attributes to payment timing differences and capitalized foreign exchange translation losses.
Segment-wise, O2C capital expenditure increased to Rs 324 billion in FY26, while retail capex declined significantly to Rs 211 billion. The largest share of investment was allocated to the unallocated segment, where capex rose sharply to Rs 559 billion from Rs 312 billion in FY25, indicating continued investment in future growth initiatives.
O2C business Q4 performance
RIL’s O2C business delivered steady full-year performance in FY26, with revenue rising 5.7 percent YoY to Rs 6,62,401 crore. EBITDA grew 10.1 percent YoY to Rs 60,546 crore, while margins improved by 30 bps to 9.1 percent, supported by strong fuel cracks, efficient feedstock sourcing, and high asset utilisation across refining and petrochemical operations.
However, Q4 FY26 performance was relatively weak, with EBITDA declining 3.7 percent YoY to Rs 14,520 crore compared to Rs 15,080 crore in Q4 FY25. Throughput volumes also fell 4 percent YoY, impacted by global supply disruptions, higher crude and LNG prices, and reduced availability of advantaged crude during the quarter.
Despite these headwinds, domestic demand remained resilient with growth across key segments, including fuels (+7 percent), polyethylene (+3 percent), and polypropylene. However, margins were pressured by higher crude premiums, elevated logistics costs, fuel retail under-recoveries, and the impact of Special Additional Excise Duty, limiting Q4 profitability.
Company Overview
Reliance Industries Limited is a diversified Indian conglomerate with businesses across Oil-to-Chemicals, retail, telecom, and new energy. Its O2C segment includes refining and petrochemicals, supported by strong global integration. The company continues to focus on expansion in digital, retail, and clean energy, driving long-term growth and value creation.
Financial Highlights: The revenue from operations grew by 12 percent to Rs 2,94,059 crore in Q4 FY26 from Rs 2,61,388 crore in Q4 FY25, and EBIDT grew by 1 percent to Rs 44,141 crore in Q4 FY26 from Rs 43,832 crore in Q4 FY25. This was accompanied by a net profit decrease of 13 percent to Rs 20,589 crore in Q4 FY26 from Rs 22,611 crore in Q4 FY25, resulting in an EPS decrease of 13 percent to Rs 12.54 per share in Q4 FY26 from Rs 14.34 per share in Q4 FY25.
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