Jefferies has maintained its ‘Buy’ rating on Reliance Industries with a target price of ₹1,600, stating that the stock’s underperformance relative to Nifty has been driven by weak retail growth and sluggish O2C earnings.
Key Insights:
- Retail slowdown impact overblown:
- Market pessimism appears excessive, as Reliance’s current market cap implies a US$ 48 billion valuation for Reliance Retail, compared to US$ 106 billion during its last funding round.
- Retail business is expected to return to a 15% growth trajectory in FY26, aided by same-store growth and area expansion.
- Potential catalysts ahead:
- Jio IPO: The timeline for Jio’s public listing could be a significant stock trigger.
- Tariff hikes in telecom: The next telecom price hike could help drive revenue growth in Reliance Jio.
- O2C profitability improvement: The oil-to-chemicals business could see margin expansion, aiding overall profitability.
Jefferies maintains that RIL’s weak performance has created an investment opportunity, given its growth potential in retail, telecom, and O2C segments.
