Buy RIL shares? Target prices as analysts cut earnings estimates by 3-6%

Stock brokerages largely maintained ‘Buy’ rating on Reliance Industries Ltd (RIL), even as its consolidated Ebitda and profit missed their estimates due to weaker-than-expected oil-to-chemical (O2C), upstream, and other segment earnings. Despite trimming their FY27 and FY28 estimates by 3-6 per cent, analysts see upside potential for RIL, saying all eyes are on Jio Platforms. 

Emkay Global noted that the West Asia crisis disrupted refining as well as propane-butane diversion to LPG and HP-HT gas diversion to priority sectors and SAED. Petchem deltas weakened due to sharp rise in naphtha prices. 

“RIL diversified sourcing (with 40-45 per cent of the ME supply impacted), while time charters insulated it from higher shipping costs. In Jio, 4-5 per cent ARPU growth may continue due to mix change, even without a tariff hike,” Emkay said adding that it slightly raised its O2C target multiple while cutting that for Upstream. The brokerage suggested a target of Rs 1,680 on the stock.

The brokerage has cut its FY27 and FY28 Ebitda and PAT estimates by 5-6 per cent each, building in the lower Retail margin and reducing other segments and upstream earnings. Its O2C earnings remained largely unchanged, albeit with upside potential.

MOFSL said RIL reported a subdued Q4, with consolidated Ebitda declining 4 per cent QoQ  or flat YoY, primarily driven by weaker profitability in Energy business due to the disruptions caused by the West Asia conflict. RIL’s consumer-facing businesses remained resilient, it noted while trimming our its FY27E Ebitda and PAT estimates by 3-4 per cent, due to challenges in the Energy business and delays in tariff hikes in RJio

“We reiterate our Buy rating with a revised target of Rs 1,655 (earlier Rs 1,715). While the energy business weakness drives the near-term earnings downgrade, sustained mid-to-high teen growth in RR and a tariff hike, along with impending JPL IPO, remain the key triggers for RIL’s stock price,” it said.

Nuvama said the New Energy rollout is on track. At 10GW capacity, RIL could add 6 per cent  to profit after tax, it said. Polysilicon, ingot/wafer and glass units is seen getting started by end-FY27 while BESS Phase-I 40GWh battery pack, containers and cells will start in FY27, 

Nuvama said captive power cost may fall 25 per cent, adding another 6 per cent to PAT, as per the management. This brokerage cut its FY27 and FY28 Ebitda estimates by 5 per cent and 3 per cent to factor in weak O2C and retail. It retained ‘Buy’ on the stock with a target of Rs 1,765.