Shares of Reliance Industries Ltd (RIL) have experienced a 19% decline this year, but a prominent brokerage firm, Antique Broking, anticipates a robust catalyst phase ahead. The firm projects three significant positive developments within the next six months that could drive a substantial re-rating of the stock, reiterating a 'BUY' rating and setting a target price of Rs 1,717 per share, implying an upside potential of approximately 33%.
Historic High Refining Margins Expected
Reliance Industries is well-positioned to benefit from an extended period of exceptionally strong refining margins, with the middle-distillate shortage likely to persist for the next 12–18 months. Geopolitical factors, including Ukrainian attacks on Russian refining infrastructure and disruptions in the Strait of Hormuz, have tightened global supply significantly.
Russian refinery runs have dropped to a 21-year low, turning the country into a net importer. Concurrently, global crude processing volumes are about 6.5 million barrels per day below year-ago levels, leading to a 21% year-on-year decline in diesel exports. Compounding this, global crude and petroleum product inventories have fallen by around 600 million barrels since March, with gasoil and gasoline inventories nearing five-year lows as winter demand approaches.
Antique Broking expects RIL's blended gross refining margins (GRMs) to remain strong, exceeding $15 per barrel compared to a normalized level of around $10. Reliance, with its export-oriented refinery in a Special Economic Zone (SEZ), is exempt from the Special Additional Excise Duty (SAED), making it a primary beneficiary of this favorable refining environment. Analysts estimate that every $5-per-barrel improvement in refining margins could add approximately Rs 22,700 crore to Reliance’s annualized EBITDA.
Jio IPO and Telecom Tariff Hikes
The draft red herring prospectus (DRHP) filed for Jio has provided further validation for Antique Broking’s sum-of-the-parts (SOTP) valuation of Reliance Industries. The Jio DRHP implies an equity valuation of around Rs 12.5 lakh crore. This valuation, alongside a potential 15% increase in telecom tariffs, could act as a significant re-rating catalyst for the broader telecom sector, enhancing Reliance's overall valuation.
The telecom sector's improving fundamentals, including strong free cash flows and return ratios above 25%, are expected to support this growth, potentially offsetting any holding-company discount over time.
Commissioning of New Energy Projects
Reliance’s ambitious new energy business presents another potential catalyst. The company is on track to begin commissioning 20 GW of solar capacity and 40 GW of battery capacity from January 2027. Following this, Reliance plans to develop a 22 GW solar power facility in Kutch over the subsequent two years.
The brokerage's calculations indicate that these projects could generate an internal rate of return (IRR) of more than 16%, even without factoring in production-linked incentive (PLI) benefits. While the current valuation of Reliance’s New Energy business at Rs 123 per share primarily reflects initial solar and battery facilities, significant potential for further value creation exists as hydrogen and green-chemicals businesses develop.
Overall Investment Outlook
Reliance’s oil-to-chemicals (O2C) business is poised to benefit from elevated refining margins through FY28, while Jio is projected to deliver organic growth of 4–5% even before any tariff increases. The New Energy business offers a visible captive-power opportunity as projects advance towards commissioning. While the retail segment remains a key weak spot, expectations for this business have already moderated.
Antique Broking identifies four key near-term catalysts for RIL stock: telecom tariff increases, a recovery in Retail, greater AI integration, and the commissioning of O2C and New Energy projects.