Reliance Industries Shares Rise After Brokerages Upgrade Stock with Target Prices up to Rs 1,600
New Delhi (The Uttam Hindu): Reliance Industries Ltd (RIL) saw its share price rise by nearly 4% to Rs 1,254 in intraday trading on Friday, March 7, 2025, following several brokerages upgrading the stock. Analysts set a target price (TP) of up to Rs 1,600 per share for the company. This marks the third consecutive day of gains for RIL stock, which has increased by 8% over this period. RIL had hit a 52-week low of Rs 1,156 on Monday, March 3, 2025.
Despite the recent recovery, Reliance's stock has underperformed the market over the past six months, declining 15%, compared to the 9% drop in the BSE Sensex. By 12:21 PM, the stock was up by 3% at Rs 1,246 and was the top performer among BSE Sensex and NSE Nifty 50 stocks, even as benchmark indices were down 0.2%.
Global brokerage Macquarie upgraded RIL to an "outperform" rating, setting a target price of Rs 1,500 per share. The brokerage noted that RIL's stock had underperformed MSCI India by 18 percentage points and Bharti Airtel by 60 percentage points over the past year. However, Macquarie's analysts highlighted several factors that could improve RIL's performance over the next 6-12 months, including better earnings momentum, a potential listing of Jio Platforms, and the gradual commissioning of new energy capacities. They forecasted a 15-16% earnings per share (EPS) compound annual growth rate (CAGR) from FY25 to FY27, compared to a mere 2% EPS CAGR in FY23-25.
On the other hand, analysts from Kotak Institutional Equities attributed RIL's weak performance to subdued retail demand. They believe that the store-rationalisation cycle will soon end and that the retail business will improve in the coming quarters. However, they also pointed to challenges such as increased sanctions on Russia and the impact of reciprocal tariffs by the US on the refining outlook. Despite these challenges, Kotak analysts upgraded RIL to a "BUY" rating from "ADD," with a revised target price of Rs 1,400 (down from Rs 1,435 earlier). They anticipate an 11% consolidated EPS CAGR over FY2024-27.
Jefferies also assigned a "Buy" rating to RIL with a target price of Rs 1,600 in a base case scenario, citing expectations of recovery in the retail business and a potential tariff hike in its telecom segment. The brokerage predicted that the retail segment's growth would recover to 15% in FY26, driven by same-store sales expansion and new store openings.
Despite a stable Q3FY25, RIL's stock has faced pressure amid weak market conditions and trade war concerns. Analysts at Emkay Global Financial Services noted that the petchem cycle has been muted for some time, though the trade war risks could still impact it. FY25 is expected to be a slower year for RIL, with a 2% expected EBITDA growth, impacted by a 10-15% decline in O2C, retail growth slowing to under 10% from 25-30% in FY24, and upstream operations normalizing after previous sharp ramp-ups.
As a result, Emkay analysts have taken a more cautious view on businesses with higher uncertainty, including Jio (due to further tariff hikes) and upstream operations (due to changing realization and profit petroleum). They have lowered RIL's consolidated EPS estimates for FY25E, FY26E, and FY27E by 6%, 13%, and 11%, respectively.
Despite the challenges, the retail business is expected to return to double-digit growth after a phase of network optimization in FY25, which aimed to remove inefficiencies caused by the pandemic and acquisitions.
