Reliance Industries is the largest company in India by market capitalization, with a diverse business portfolio spanning multiple sectors. Founded by Dhirubhai Ambani, the conglomerate has established a dominant presence in industries such as petrochemicals, refining, and oil & gas exploration. Additionally,
Reliance is a major player in telecommunications through its subsidiary, Jio, which has revolutionized India’s digital landscape. The company also operates in retail, media, and technology, continuously expanding its reach across both domestic and global markets. Reliance’s wide-ranging businesses and strong market position make it a key driver of India’s economic growth.
Share Price
The shares of Reliance Industries Limited are currently trading at Rs. 1,230.45 down by 1.27% from its previous close of Rs. 1,246 as of January 27, 2025.
Recent Sell-off in Reliance Shares
Reliance Industries’ stock experienced a significant sell-off following the company’s bonus share issue announcement on October 2024, when the company issued bonus shares in a 1:1 ratio. After the ex-bonus date, the stock, which was previously trading at around Rs. 1,603, saw a sharp decline, reaching a low of Rs. 1,201. This 25% fall in share price reflected investor concerns and a broader market reaction to the company’s financial performance.
Motilal Oswal’s ‘Buy’ Rating on Reliance Industries Ltd. (RIL)
Brokerage firm Motilal Oswal has reiterated its ‘Buy’ rating on Reliance Industries Ltd. (RIL) with a base case price target of ₹1,215 per share. The brokerage also presented a bull case scenario with an estimated target of ₹1,930, representing a potential upside of 55%. Despite recent underperformance, Motilal Oswal remains optimistic about RIL’s future growth prospects.
Underperformance and Recent Challenges
Reliance Industries has underperformed broader market indices over the past few years, delivering negative returns in CY24, marking its first such occurrence in the last decade. The underperformance is attributed to continuous earnings downgrades due to moderated growth in Reliance Retail and weak refining and petrochemical margins, impacting overall performance.
Steep Correction and Risk-Reward Profile
Over the past six months, RIL’s stock has seen a significant correction, which has shifted its risk-reward profile to a more favorable position. Motilal Oswal suggests that the stock is now trading at its bear case valuation, considering Reliance Jio’s current valuation at a 10% discount to Bharti Airtel, presenting a potential opportunity for investors.
Future Growth Prospects and Medium-Term Triggers
Motilal Oswal expects high-single-digit growth in core retail revenue and EBITDA, alongside flat O2C (oil-to-chemicals) earnings over FY24-27. Key medium-term catalysts for RIL include the initiation of gigafactories in the New Energy segment by FY25, the potential listing of Reliance Jio in CY25, and a rebound in Reliance Retail’s growth by FY26.
Strong Free Cash Flow and Deleveraging
The brokerage emphasizes RIL’s moderated capital expenditure intensity and projected free cash flow (FCF) generation of ₹90,000 crore over FY24-27. This, coupled with deleveraging of the balance sheet, is expected to strengthen the company’s financial position and enable future growth. These factors make RIL an attractive investment, despite short-term challenges.
Written By: Dipangshu Kundu
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