Synopsis:
Reliance Industries shares are in focus as UBS expects the stock to rise by another 26 percent, citing a significant earnings transformation over the past five years and strong growth prospects across its key business segments.
The shares of this leading NIFTY stock, which currently has a weightage of 8.39 percent in NIFTY 50, are back in focus as analysts highlight numerous upticks in the business.
With a market capitalization of Rs 18,89,268 crore, the shares of Reliance Industries Ltd are currently trading at Rs 1,394 per share, representing a decline of 10 percent from its 52-week high of Rs 1,551 per share. Over the past five years, the stock has delivered a positive return of 32 percent.
Analyst Comments
Leading global brokerage UBS has assigned a Buy call on the stock with a target price of Rs 1,750 per share, signaling an upside of 26 percent from its current market price of Rs 1,396 per share.
UBS cited that Reliance Industries has gone through a significant earnings transformation over the past five years. This shift has set the stage for unlocking substantial value across its various operations. The brokerage anticipates that Reliance Jio is nearing maturity, forecasting mid-teen revenue growth and increasing free cash flows in the next 12 to 18 months.
The retail segment is also expected to maintain growth in the teens, thanks to the completion of its B2B restructuring and the positive effects of two years of store expansion. On another front, RIL’s new energy business is expected to make a meaningful contribution to EBITDA by FY27, bolstered by ambitious goals to establish 10 GW of solar PV capacity and 15 GWh of battery capacity.
Additionally, UBS points out that from FY15 to FY26, the EBIT share from RIL’s retail and telecom segments has skyrocketed from nearly zero to 48 percent of total earnings.
During this period, the company’s P/E multiple has also doubled, climbing from 10x to 20x. When compared to industry standards, where Indian retail trades at 40–60x P/E and telecom at 35–40x P/E, UBS believes there’s still plenty of room for RIL’s stock to be re-rated.
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Financial Highlights
The company’s revenue for Q1 FY26 came in at Rs 2,43,632 crore, registering a 5 percent growth from Rs 2,31,784 crore in the same quarter last year. However, on a sequential basis, revenue declined by 7 percent from Rs 2,61,388 crore in Q4 FY26.
Coming to its profitability, the company reported a net profit growth of 76 percent to Rs 30,783 crore in Q1 FY26 as compared to Rs 17,445 crore in Q1 FY26. Additionally, on a QoQ basis, it grew by 36 percent from Rs 22,611 crore.
However, it is to be noted that higher net profit was mainly aided by a higher other income of Rs 15,119 crore in Q1 FY26, i.e, a growth of 280 percent from its Q1 FY26 other income of Rs 3,983 crore.
The stock delivered an ROE and ROCE of 8.40 percent and 9.69 percent respectively, and is currently trading at a P/E of 26.19x as compared to its industry average of 17.62x.
Written by Satyajeet Mukherjee
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