Reliance Industries Shares: Goldman Sachs Lowers Target Price But Maintains 'Buy'

Goldman Sachs has lowered its target price for Reliance Industries Ltd., even as it continues to maintain 'buy' rating for the oil-to-telecom conglomerate.

In a note issued on Thursday, the brokerage reduced RIL's target price to Rs 1,595 from its previous target of Rs 1,630. The revised target price suggests a 26% potential upside, as compared to the stock's closing price on Wednesday.

"We believe the sell-off in RIL's shares is overdone as the share price is now near our bear case scenario," it said.

Goldman Sachs is optimistic about RIL's return expansion in fiscal 2026, with returns of telecom arm Jio already seen to be inflecting. It expects the earnings before interest, taxes, depreciation and amortisation to grow 24% year-on-year in fiscal 2026.

The brokerage also expects the cash return on cap invested, or CROCI, to rise by 110 basis points during fiscal 2026. It sees the CROCI rising by another 75 basis points in fiscal 2027.

The optimistic view of Goldman Sachs is driven by the assumption of refining margin improvement, telecom tariff hike in fiscal 2026, "return of retail top-line growth from FY26", and potential start of the new energy giga complex.

The brokerage, however, also flagged the points that are seen to be not going in RIL's favour. This includes the company's return inflection thesis "taking longer than expected", it said.

In the October-December quarter, Goldman Sachs sees RIL's EBITDA to "remain largely flat" on annual basis, despite being expected to grow 5% sequentially.

The brokerage has also lowered the company's Ebidta estimate for the period between fiscal 2025 to fiscal 2027 by up to 4%.

Morgan Stanley, in a note issued on Wednesday, maintained the 'overweight' rating on RIL's stock, while setting a target price of Rs 1,662. The revised target suggested a 34% upside potential, as compared to the last traded price on Tuesday.

"In 2025, as new refining capacity is absorbed, retail profitability improves, and new energy cash flows kick in, re-rating should regain traction," the brokerage said.

In the December quarter, however, Morgan Stanley expects the company's Ebitda to remain flattish on an annualised basis despite rising 4% sequentially, as "telecom tariff hikes and tightness in global fuel markets filter through in profitability".

Bernstein, in a note shared on Monday, set a target price of Rs 1,520 apiece for RIL, which suggested an upside of 25%. "After a difficult 2024, we see a favorable set up for Reliance into 2025," it said.

According to the brokerage, 2025 will a recovery cycle for RIL, led by a 12% climb in Jio's average revenue per user, double-digit Ebitda growth in retail business, and an increase in gross refining margins after a decline in fiscal 2024.

At closing bell, the shares of RIL settled 0.69% lower at Rs 1,256.8 apiece on the NSE on Thursday. The benchmark Nifty 50 also ended 0.69% lower at the closing bell.

The stock has declined by 2.75% over the past 12 months.

Among 39 analysts tracking the stock, 33 have a 'buy' rating, and three each suggest 'hold' and 'sell', according to Bloomberg data. The average of 12-month analysts' price target suggests a potential upside of 26.2%.