Reliance Industries set for up to 16% upside? CLSA, Citi bullish on Jio and retail
Reliance Industries shares have seen muted performance so far in the last 12 months. However, the global brokerages CLSA and Citi expect an upside of as much as 16% over the next 12 months on the back of the growth potential in their telecom and retail business.
CLSA on Reliance Industries: Stock to outperform, likely 14% upside
According to the brokerage firm CLSA, the first quarter of FY26 is going to be exciting for Reliance Industries. The brokerage expects to see notable improvements in KPIs across its key businesses in Q1 earnings of FY26. This comes after a year-long lull underscored by a weak retail performance due to its operational streamlining and consolidation in telecom subscribers.
“After a muted FY25, we anticipate a notable improvement across all Reliance’s businesses from Q1 onwards, which could trigger excitement in the stock,” said CLSA. The drag in Reliance Industries’ stock performance last year was partially due to operational streamlining in its retail operations, which CLSA expects is now over.
Upcoming Jio IPO the next big trigger for RIL: CLSA
Also, the oil-to-retail giant’s AGM in August or September should be an important event, which may hold hints for an upcoming Jio IPO, as well as announcements on scaling up in quick commerce, FMCG, and new energy.
CLSA outlined that any hint about the listing of Jio could trigger the stock. In addition, announcements and details regarding JioStar and its quick commerce offering, along with its FMCG expansion plans, could be fresh tailwinds for our valuation of the stock.
Citi on Reliance Industries: Jio looking beyond tariff hikes
Citi said that the market’s focus on tariff hikes misses several other structural drivers that provide a long runway for growth for the Indian telecom sector in general and Jio in particular.
“We forecast a 3-year consolidated EBITDA CAGR of 16% for Jio Platforms (JPL), valuing the business at an enterprise value (EV) of $135 billion; the contribution of factors other than tariff hikes to this growth is 6-7% CAGR,” said Citi.
The global brokerage firm has a Buy recommendation on Reliance Industries, with a target price of Rs 1,690, which expects an upside of 16%. Revenue Market Share (RMS), a key metric, expansion & margin levers create room for further upside, said Citi.
Citi raised the enterprise value for Jio Platforms to $135 billion from $125 billion, driven by a one-notch increase in our target enterprise value/EBITDA to 13x from 12x.