India’s most valued company, Reliance Industries Ltd (RIL), reported a robust performance in the third quarter of the current financial year (Q3FY25), surpassing analyst expectations.
This coupled with positive commentary by brokerages led to the stock of the oil-to-telecom conglomerate surging as much as 4.44 per cent to hit an intraday high of Rs 1,325.1.
It settled at Rs 1,301.3 apiece, up 2.57 per cent.
By comparison, the BSE Sensex ended 0.55 per cent lower at 76,619.33 levels.
Given the strong Q3FY25 results and recent correction in the stock, most brokerages remain optimistic about RIL’s future prospects and the potential in the stock.
Emkay has upgraded RIL to a ‘buy’ rating from ‘add,’ citing attractive valuations.
RIL’s consolidated Q3FY25 earnings before interest, taxes, depreciation and amortisation (Ebitda) stood at Rs 43,800 crore, a 4 per cent beat compared to estimates, driven by retail and oil-to-chemical or O2C segments, which exceeded expectations by 10 per cent and 6 per cent, respectively.
Upstream and Jio performance aligned largely with forecasts.
Retail’s top line growth of 9 per cent year-on-year (Y-o-Y), against expectations of a marginal decline, resulted in improved profits with stable margins.
The consolidated net profit exceeded estimates by 3 per cent, aided by a higher share of minority interest and lower other income.
The management remains optimistic about sustained growth in retail, supported by festival demand and operational streamlining.
They also outlined ongoing downstream expansion projects in O2C and anticipated margins normalising to mid-cycle levels. While FY25-27 earnings projections remain largely unchanged, the September 2025 target price has been trimmed by 6 per cent to Rs 1,570, reflecting a 10 per cent cut in the retail segment’s valuation multiple.
Key catalysts include developments in the new energy and vertical monetisation.
Meanwhile, Motilal Oswal maintained its ‘buy’ rating but increased the target price to Rs 1,600 from 1,550.
“We raise our FY25 Ebitda and net profit estimates by 2-4 per cent.
"However, our FY26-27 estimates are broadly unchanged.
"We model 10 per cent Ebitda/net profit growth over FY24-27, driven by more frequent tariff hikes in RJio and growth recovery in retail,” Motilal Oswal Research said in a note.
Kotak Institutional Equities pointed out that RIL’s Q3FY25 consolidated Ebitda grew 7.7 per cent Y-o-Y and 12 per cent Q-o-Q, surpassing estimates by 3 per cent.
Retail performance was a highlight, with Ebitda rising 9.1 per cent Y-o-Y and 16.7 per cent Q-o-Q, 8 per cent above expectations.
O2C and exploration and production segments also exceeded estimates by 5-7 per cent.
However, telecom lagged due to the slow impact of the July 2024 tariff hike, with reported Ebitda up 17 per cent Y-o-Y but 4.4 per cent below projections.
Analysts have maintained their ‘add’ rating, with a revised fair value of Rs 1,435.
According to reports, CLSA maintained an ‘outperform’ rating with a target price of Rs 1,650.
The brokerage noted that Q3 Ebitda and profit exceeded expectations, driven by stronger-than-expected performances in upstream and retail segments.
While Jio numbers fell short due to a miss on Arpu despite better-than-expected subscriber additions, Retail Ebitda was 8 per cent above estimates, with Ebitda per square foot reaching a 10-quarter high.
Jefferies retained a ‘buy’ rating with a target price of Rs 1,660.
It highlighted that Q3 Ebitda was 5 per cent ahead of estimates, boosted by strong performance in retail and O2C segments.
Retail growth signals suggest the worst may be over, while Jio’s Ebitda missed expectations due to lower Arpu and elevated costs.
O2C profitability was driven by refining, with an improved outlook for FY26, it added.
Morgan Stanley maintained its ‘overweight’ rating with a target price of Rs 1,662.
The brokerage highlighted RIL’s strong Q3 earnings, which exceeded expectations.
The company appears to be back on a growth trajectory after six months of challenges, supported by higher energy Ebitda, a turnaround in retail, and outperformance in chemicals margins.
Citi, too, maintained 'buy' with a target price of Rs 1,530.
On the flipside, Nuvama retained its ‘buy’ rating but reduced its target price to Rs 1,673.
RIL’s highest-ever Ebitda of Rs 43,800 crore exceeded Q3FY25 estimates, driven by strong performance across all segments.
Long-term growth visibility remains intact, with RIL expected to rank among the top 10 global producers post-petchem expansion.
The new energy segment is projected to equal O2C profits within 5–7 years, contributing over 50 per cent to consolidated PAT and delivering higher value given its clean energy focus.
Nuvama added that developments at Deen Dayal Port and Khavda for renewable energy and green hydrogen remain critical drivers.
However, a 5 per cent cut in FY26 Ebitda due to lower petchem margins and an increased holding company discount for consumer businesses, as RIL prepares for listing Jio and Retail, has led to an 8 per cent reduction in the target price to Rs 1,673.
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