logo
Will Reliance shares deliver bumper returns for 48 lakh shareholders? 3 game-changing triggers ahead

Will Reliance shares deliver bumper returns for 48 lakh shareholders? 3 game-changing triggers ahead

Economic Times6 days ago
Despite recent investor disappointment with Q1 results, Reliance Industries (RIL) is poised for significant growth, according to major brokerages. Jio's rising ARPU through tariff hikes, the ambitious new energy business entering execution phase, and the potential Jio IPO are key catalysts. Analysts project substantial value creation, with targets indicating confidence in RIL's transformation.
Tired of too many ads?
Remove Ads
Here are 3 growth triggers that can ignite a rally in RIL shares:
1) Jio's ARPU Explosion Through Strategic Tariff Hikes
Tired of too many ads?
Remove Ads
2) New Energy Business: The Next Opportunity
Tired of too many ads?
Remove Ads
3) Jio IPO: The Ultimate Value Crystallization Event
While billionaire Mukesh Ambani-led Reliance Industries RIL ) disappointed investors with Q1 results that fell short of street expectations, leading to sharp selling pressure after a blistering 25% rally from March lows, major brokerages see a perfect storm of growth catalysts brewing that could trigger substantial value creation in the months ahead.The mixed street reaction tells the tale of two stories: Kotak Equities downgraded the blue-chip Nifty heavyweight to 'Add' from 'Buy,' while global giants JP Morgan and Jefferies boldly upgraded their target prices by 8% and 5% respectively, signaling confidence in the oil-to-telecom giant's transformation story.Jio delivered a "strong beat on higher margins" with ARPU climbing 1.3% quarter-on-quarter to ₹208.8 per month, according to Bernstein. But the real fireworks are yet to come."Over FY25-28, we expect Jio's ARPU to rise at 11% CAGR to Rs273, led by three tariff hikes of 10% each in end-2QFY26/27/28," Jefferies analysts project, with rising share of higher-ARPU home broadband users providing additional momentum.The telecom powerhouse added 498.1 million subscribers (+1.7% QoQ) with EBITDA margins surging to 51.8% (170bps QoQ), as consolidated revenue hit ₹410.5 billion (+18.8% YoY).RIL's ambitious new energy push is entering the critical execution phase, with management expecting "Giga factories/new energy projects (Polysilicon, wafer, cell, module, batteries) to be completed in the next four to six quarters."The scale is staggering: "Reliance gigacomplex will be the largest end-to-end renewable energy manufacturing 4x of Tesla giga factory," Bernstein notes. The company plans to commission solar/cell capacities by March next year, with the 7,000-acre Kutch site having "potential to produce 125GW of power."Nuvama's analysis reveals the hidden value bomb: "Drawing a solar module/cell capacity comparison with Waaree (13.3/5.4GW) and Premier (4/3.2GW), whose EVs are ~$10 bn and $6 bn, respectively, RIL's 20GW fully integrated solar equipment manufacturing facility could potentially translate to a much higher EV."The numbers are eye-popping: "Ascribing a 15x EV/EBITDA to RIL's modules business (20GW capacity) yields an EV of USD20bn, which could trigger a valuation re-rating for RIL's stock price—similar to the trend seen following RJIO's launch in 2017."This fundamental shift in RIL's business model is reshaping its investment appeal. "Prior to venturing into retail/telecom, RIL's earnings growth was determined by either: a) capex (new refining/chemical capacities), or b) margin cycles," JP Morgan notes. "Reliance Retail + Telecom now account for ~54% of total FY25 consolidated EBITDA."The new energy vertical adds another dimension: "RIL's New Energy rollout shall not only add 50%-plus to PAT, but also re-rate valuations, including the O2C business given its net zero-carbon target by 2035," according to Nuvama.The much-anticipated Jio IPO, though "pushed beyond 2025," remains the ace up RIL's sleeve for unlocking massive shareholder value. JP Morgan values Reliance Retail at $121 billion, trading at ~32x FY27E EBITDA—significantly below DMART's 42x multiple."Any crystallization of this retail valuation upside – through an IPO process or through further stake sales – could lead to further upside in RIL's stock," JP Morgan analysts emphasize.CLSA's confidence is palpable: "We expect Reliance's consolidated Ebitda to improve significantly in the near future, led by increasing share of Jio and Retail." The brokerage sees RIL's "conservative valuation" as making it "an attractive bet for most large cap portfolios" in an "otherwise extended valuation of the Indian market."JP Morgan's investment thesis is equally compelling: "In a market where most stocks are trading well above historical valuations, Reliance's fair relative valuations are an attraction." The firm expects RIL to "deliver positive free cash flow" with an EBITDA run-rate of approximately $20 billion annually.Nomura reinforces the bullish narrative: "The stock currently trades at 12.1x and 23.3x FY27F EV/EBITDA and P/E, respectively. We reiterate our Buy rating for RIL."Investors will now laser-focus on the upcoming AGM within two months, looking for "further announcements on growth plans in FMCG, the ramp-up of new energy facilities, the expansion of the media business, acceleration of growth in Retail, the ramp-up of subscriber additions and monetisation for Jio along and the IPO of Jio."With RIL targeting to "double the size of its Jio and Retail businesses" alongside the new energy ramp-up "to the size of its O2C business," the company's ambitious goal of "doubling Reliance's size by the end of FY30" suddenly appears within striking distance, according to brokerages.For RIL's 48 lakh shareholders weathering the current volatility, the message from Street's finest is clear: the best may be yet to come.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

How did Anil Ambani's telecom company go bankrupt, once used to challenge Airtel, Idea, launched Rs 500 phone to....
How did Anil Ambani's telecom company go bankrupt, once used to challenge Airtel, Idea, launched Rs 500 phone to....

India.com

time25 minutes ago

  • India.com

How did Anil Ambani's telecom company go bankrupt, once used to challenge Airtel, Idea, launched Rs 500 phone to....

Anil Ambani (File) Several companies of Anil Ambani were raided by the Enforcement Directorate under the Prevention of Money Laundering Act (PMLA), leading to several stories about Anil Ambani's legacy. Anil Ambani's Reliance Infocomm, later rebranded as Reliance Communications (RCom)—once stood as the telecom flagship of the Reliance empire. In the beginning, Reliance Communications (RCom) embodied disruptive growth with slashing call rates, bundled handsets, and rapid expansion into India's underserved markets. However, within a decade, Anil Ambani's spiraled from market leader to bankruptcy. How did Reliance Infocomm grew so big? Launched in the early 2000s, Reliance Infocomm rapidly grew under Anil Ambani's leadership after the 2005 split of Reliance Industries. The company pioneered CDMA services in India with the 'Monsoon Hungama' campaign, making mobile telephony accessible to lower-income segments. Riding high on investor enthusiasm, RCom's IPO in 2006 was oversubscribed dozens of times, allowing it to build one of the country's largest telecom networks. Notably, Reliance Infocomm revolutionized the telecom market by offering CDMA mobile phones for Rs 501 under the 'Monsoon Hungama' plan in 2003, giving a tough competition to Idea and Bharti Airtel. How did Reliance Communications' downfall come? Reliance Communications' downfall was driven by poor strategic choices, including sticking too long with outdated CDMA technology and entering the GSM space late. The launch of Reliance Jio by Mukesh Ambani worsened its decline. Mounting debt, failed deals, and rising losses led RCom to file for bankruptcy in 2019, marking the collapse of what was once a telecom giant. Anil Ambani's Reliance Group announces Rs 18000 crore investment plan Anil Ambani's Reliance Group will focus on defence, power and clean energy sectors to chart the next phase of growth that will train resources on innovation and value creation, it said on Sunday. Just as financial crime-fighting agency, Enforcement Directorate concluded searches at locations linked to the group as part of an investigation into alleged money laundering and siphoning of public funds, over 100 top leaders from its two listed firms — Reliance Infrastructure and Reliance Power — convened in Mumbai on Sunday to reaffirm their commitment to its ambitious growth roadmap. (With inputs from agencies)

Enforcement Directorate searches are over, say Reliance Group companies
Enforcement Directorate searches are over, say Reliance Group companies

The Hindu

timean hour ago

  • The Hindu

Enforcement Directorate searches are over, say Reliance Group companies

Reliance Group firms Reliance Infrastructure (RInfra) and Reliance Power (RPower) on Sunday (July 27, 2025) said the Enforcement Directorate (ED) had concluded searches on their premises and that the companies would continue to cooperate with the agency. Both the Anil Ambani-led group's companies said they, including their officials, would continue to fully cooperate with the ED. They said that the said action had no impact on their business operations. RInfra said, 'Action by ED has no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders of the company. The same appears to pertain to allegations concerning transactions of Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL), which are over 10 years old. Reliance Infrastructure is a separate and independent listed entity with no business or financial linkage to RCOM or RHFL.' 'RCOM is undergoing Corporate Insolvency Resolution Process as per the Insolvency and Bankruptcy Code, 2016, since over six years,' it said. RPower also said the same, adding that the company continued to operate in its normal course and that the said action had no impact on its business operations. The ED began searching multiple premises linked to the group on Thursday (July 24, 2025) over alleged money laundering and financial irregularities, running into crores of rupees, and the searches continued for the third day on Saturday (July 27, 2025).

Private equity deal: Multiples-led consortium moves CCI for 32% VIP Industries stake; Rs 1,438 crore deal to trigger open offer
Private equity deal: Multiples-led consortium moves CCI for 32% VIP Industries stake; Rs 1,438 crore deal to trigger open offer

Time of India

time8 hours ago

  • Time of India

Private equity deal: Multiples-led consortium moves CCI for 32% VIP Industries stake; Rs 1,438 crore deal to trigger open offer

A consortium led by Multiples Alternate Asset Management has approached the Competition Commission of India (CCI) seeking approval to acquire a 32% stake in luggage maker VIP Industries, according to a notice filed with the regulator. The application follows the July 13 announcement that VIP Industries' promoters — Dilip Piramal and family — will sell up to 32% of their shareholding to the Multiples-led group. The proposed acquisition will trigger a mandatory open offer for an additional 26% stake from public shareholders, in accordance with Sebi's takeover code, PTI reported. Assuming full acceptance of the open offer, the deal is valued at Rs 1,437.78 crore. Upon completion, control of the company will shift to Multiples, although the Piramal family will remain shareholders. Dilip Piramal will be designated Chairman Emeritus. The investor consortium includes Multiples Private Equity Fund IV (MPEF), Multiples Private Equity Gift Fund IV (MPGF), Samvibhag Securities (a portfolio company of investor Akash Bhanshali), and Caratlane founder Mithun Padam Sacheti and his brother Siddhartha Sacheti. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Free P2,000 GCash eGift UnionBank Credit Card Apply Now Undo Profitex Shares and Securities is also part of the transaction. 'The proposed combination will not lead to any change in the competitive dynamics, let alone cause any appreciable adverse effect on competition in India,' the consortium stated in its CCI filing. It also noted that defining a relevant market could be left open, consistent with previous CCI practice. Multiples focuses on core sectors such as financial services, pharma and healthcare, consumer, and technology. Samvibhag Securities represents interests aligned with Bhanshali. As of June 2025, promoter entities held 51.73% in VIP Industries. With a market capitalisation of Rs 6,389.47 crore, the Mumbai-based firm competes with Samsonite and Safari Industries in the premium and mass segments. It owns brands like VIP, Aristocrat, Skybags, Carlton, and Caprese, and had over 50% market share in India's branded luggage space in FY24. However, increasing competition has begun to eat into VIP's share. For FY25, the company reported revenue of Rs 2,169.66 crore. Founded in 1971, VIP is Asia's largest and the world's second-largest luggage manufacturer, with over 10,000 retail points across 45 countries. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store