Reliance Industries Ltd. has received a positive view from JPMorgan, which has maintained an Overweight rating on the stock and set a target price of ₹1,660, implying an upside potential of about 28.5% from current levels.
The brokerage expects strength in the company’s Oil-to-Chemicals (O2C) business and the ramp-up of its New Energy operations to support earnings growth through FY27.
With a market capitalization of ₹17.47 lakh crore, Reliance shares closed at ₹1,291, down 1% during the session. The stock has declined 10.47% over the past year.
JPMorgan’s Investment Case
JPMorgan expects Reliance to benefit from:
- Strong refining spreads.
- Healthy petrochemical margins.
- A weaker rupee.
- Growth from New Energy businesses.
- Attractive valuations.
According to the brokerage, the commissioning and scale-up of Reliance’s New Energy projects could emerge as an important catalyst over the next few years.
Capex Continues to Support Future Growth
Reliance’s FY26 annual report showed headline capital expenditure of ₹1.4 trillion, up 10% from the previous year.
However, capital expenditure reflected in cash flows declined 11% to ₹1.2 trillion.
JPMorgan attributed the difference to:
- Timing of payments.
- Capitalised foreign exchange translation losses.
Segment-wise capex in FY26
| Segment | FY26 Capex |
|---|---|
| O2C | ₹324 billion |
| Retail | ₹211 billion |
| Unallocated segment | ₹559 billion |
Investment in the unallocated segment increased sharply from ₹312 billion in FY25 to ₹559 billion in FY26, indicating continued spending on future growth areas.
O2C Business Delivered Strong Full-Year Performance
Reliance’s Oil-to-Chemicals segment posted steady growth during FY26.
FY26 performance
- Revenue rose 5.7% to ₹6,62,401 crore.
- EBITDA increased 10.1% to ₹60,546 crore.
- EBITDA margin improved by 30 basis points to 9.1%.
The improvement was supported by:
- Strong fuel cracks.
- Efficient feedstock sourcing.
- High asset utilisation.
Q4 Performance Faced Headwinds
The March quarter was weaker for the O2C business.
Q4FY26 EBITDA declined 3.7% to ₹14,520 crore, compared with ₹15,080 crore a year earlier.
Throughput volumes also fell 4%.
According to the company, profitability was affected by:
- Global supply disruptions.
- Higher crude and LNG prices.
- Lower availability of advantaged crude.
- Higher logistics costs.
- Fuel retail under-recoveries.
- Special Additional Excise Duty.
Despite these pressures, domestic demand remained healthy.
Volume growth during the quarter included:
- Fuels: 7%
- Polyethylene: 3%
- Polypropylene: 3%
Overall Q4FY26 Financial Performance
Revenue from operations rose 12% year-on-year to ₹2,94,059 crore, compared with ₹2,61,388 crore in Q4FY25.
EBITDA increased 1% to ₹44,141 crore.
Net profit, however, declined 13% to ₹20,589 crore from ₹22,611 crore.
Earnings per share fell to ₹12.54, compared with ₹14.34 a year earlier.
Company Profile
Reliance Industries operates businesses across:
- Oil-to-Chemicals.
- Retail.
- Telecom.
- New Energy.
The company continues to invest in digital services, retail expansion and clean energy projects as part of its long-term growth strategy.
TL;DR
JPMorgan has retained an Overweight rating on Reliance Industries and set a target price of ₹1,660, implying about 28.5% upside. The brokerage expects strong O2C fundamentals and the ramp-up of New Energy projects to drive earnings growth through FY27.
AI Summary
- JPMorgan has an Overweight rating on Reliance with a ₹1,660 target price.
- The brokerage sees 28.5% upside from current levels.
- Strong refining spreads and a weaker rupee are expected to support O2C earnings.
- Reliance invested ₹1.4 trillion in FY26.
- New Energy businesses are seen as a key growth catalyst through FY27.
