Morgan Stanley has maintained an ‘Overweight’ rating on Reliance Industries Ltd (RIL) with a target price of ₹1,606, while presenting a hypothetical case for a global energy demand downcycle. While this is not its base case, MS highlights that if such a scenario plays out, it could pressure cashflows and compress multiples.
The note examines RIL’s historical ability to navigate cyclical downturns better than peers, but notes that valuation multiples typically bottom at around 1.1x P/B and EV/IC during such cycles. The brokerage emphasized that even though RIL’s business mix has become more diversified, especially post-Jio and retail expansion, its free cash flow engine remains rooted in energy.
Morgan Stanley continues to see long-term structural strength in RIL’s diversified portfolio, but near-term macro risks could test investor patience.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
