Brokers continue to recommend buying Reliance Industries despite a little profit—learn why by reading on

The Reliance Industries stock’s rating and target price have been upheld by brokerage company Motilal Oswal. However, given that volume is anticipated to be reduced sequentially, it said that the business would see some impact on oil to chemicals profitability in the first quarter of FY25. With a target price of Rs 3,245 per share, it is rated as a “buy.”

Nonetheless, due to the refining net capacity increases in CY24, the company’s oil-to-chemicals profitability is expected to remain robust over the following 1.5 years, lagging the rise in oil demand. Additionally, CY23 marked the end of the oil refineries’ significant supply expansion. According to a research study by Motilal, “Standalone EBITDA stood at Rs 20,000 crore in Q4 FY24 (10% above our estimate), supported by better feedstock sourcing, higher domestic product placement, and increased sales volume QoQ.”

For FY25 and FY26, the brokerage business Motilal has increased the capital expenditure forecasts to Rs 1.2 lakh crore annually. Telecom would have an annual revenue of Rs 39,200 crore for segregation, Rs 65,000 crore for standalone company, and the remaining amount for other business divisions.

According to JM Financials, they have kept their “Buy” recommendation on the stock because they believe that the company’s net debt would progressively decrease and that worries about leverage are overblown. The company’s planned capital expenditures will be entirely financed by a progressive rise in internal cash production, in addition to being moderated.

Reliance Industries may potentially generate a strong 14–15% growth in profits per share over the next three to five years, according to brokerage firm JM Financial, with Jio’s ARPU predicted to increase at a 10% CAGR from FY23 to FY28. Given the industry structure, upcoming investment requirements, and the need to prevent a duopoly market—A Giant Digital Leap—the company’s ARPU is on “a structural uptrend.” The bad news, according to JM Financial, is that new projects’ revenue visibility is limited and significant capital expenditures would likely lead to increased net debt. Additionally, the company’s poor downstream margins because of economic worries, restricted ARPU rise, and lackluster customer acquisition are all unfavorable factors.

Opposing the trend, Centrum Broking cut its expectations for FY25 profits by 3.1% because of pressure on petchem. It did, however, increase FY26 profit projections by 4%. The “Buy” rating has not changed, and the target price has been adjusted to Rs 3,481 from Rs 3,299 before.

We have slightly raised our FY26 forecast due to improved Jio subscriber additions, a stronger realization of the gas production from the KG basin, and improved O2C profitability. With a revised target price of Rs 3,227, we retain the “Buy” recommendation, according to Antique Broking. Prior to this, the brokerage business set a target price of Rs 3,005. The price target was increased in light of the stronger profits as well as the fact that we believe the telecom industry has a higher multiple because of several industry tailwinds.