Notwithstanding the grandstand announcement that Reliance Industries will double in size by the end of the decade, stakeholders are dissatisfied as there are no near-term catalysts for the stock.
Analysts and investors had high expectations that chairman and managing director Mukesh Ambani would at least set out a timeline or even hint at a listing of RJio or Reliance Retail, two major verticals in the conglomerate. However, Ambani stuck to a long-term ambitious vision for the company as a whole and Jio and retail, which he said would double revenue and EBITDA in the next 3-4 years.
Some of the value creation objectives mentioned by Ambani included aiming to make Jamnagar the energy capital of the world and looking to make RIL among the world’s top 30 companies shortly (it is among the top 50 now).
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“We consider target to double Jio and Retail revenue, EBITDA in next 3-4 years to be ambitious,” said BofA Securities. “Some of the key drivers behind that would be continued tariff hikes in telcos, new growth drivers like enterprise, JioAirFiber, continued expansion in retail and maybe potential M&A,” it said. The broker firm pointed out that with no near-term value-unlocking events, the focus would be on business drivers.
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“With telecom tariff hikes in place, retail and the O2C subdued, there are no near-term catalysts in our view,” said Kotak Institutional Equities, which has an ‘’Add’’ recommendation and a fair value of ₹3,200.
Jefferies pointed out that the expansion in O2C business has been scaled down. The new polyester capacity addition is now 1 million tonnes compared to 2 million tonnes earlier. The investment banker said its valuation of this incremental petrochemical capacity is $7 billion from $10 billion earlier.
While Ambani spoke a lot on the emerging new energy business with specific timelines on production and capacity implementation, the commissioning of energy storage system battery capacity has been delayed by a year to the second half of 2025, and the backward integration to cells in later quarters. “New energy commissioning could see delays that push out value discovery to FY27,” Jefferies said.
It has cut its price target to ₹3,500, from ₹3,530 earlier due to the lower value of new petchem but maintained its ‘buy’ recommendation.
The RIL stock opened with a gap up on Friday and zoomed to a high of ₹3,079.45 on the NSE but couldn’t maintain the momentum and eventually ended 0.6 per cent down at ₹3,024.95.