CLSA Raises Reliance Target to ₹1,800 on Jio Listing Buzz

Introduction

Brokerage firm CLSA has revised its price target for Reliance Industries Ltd. (RIL), raising it to ₹1,800 per share. This new target suggests a significant upside potential of 29% from the stock's recent closing price of ₹1,392.4. The optimistic forecast is largely driven by the anticipated value unlocking from the potential public listing of its telecom subsidiary, Jio, which CLSA expects could happen by mid-2026. This move positions CLSA among a growing number of analyst firms with a highly bullish outlook on the Nifty 50 heavyweight.

CLSA's Bullish Stance Explained

In its latest note, CLSA detailed the rationale behind the upgraded target price. The core of its valuation rests on the future prospects of Reliance Jio. The brokerage estimates Jio's Enterprise Value could reach $161 billion by March 2027 and further grow to $190 billion by March 2028. This valuation is based on a 15% premium compared to global telecom peers, with Free Cash Flow (FCF) being the preferred metric for this comparison. The potential initial public offering (IPO) of Jio is viewed as a pivotal event that could crystallize the value of the digital services business for RIL shareholders.

A Balanced Valuation Approach

While the outlook for Jio is strong, CLSA's analysis presents a balanced view across RIL's diversified portfolio. The brokerage has moderated its expectations for some of the conglomerate's other ventures. Specifically, it has reduced the valuation multiples for the new energy business. Additionally, the value of the retail business has been trimmed to a level that is an implied 10% below the equity value from a stake sale conducted over two years ago. This nuanced approach indicates a thorough re-evaluation of each business vertical based on current market conditions and future growth trajectories.

Recent Stock Performance and Market Correction

Despite the positive long-term outlook from analysts, RIL's stock has faced some pressure recently. Shares ended 1.5% lower on Tuesday at ₹1,392.4. This is part of a broader correction that has seen the stock decline 13% from its record high of ₹1,611, which was achieved earlier this month. This recent dip provides a different entry point for investors who align with the bullish long-term consensus. The correction has not deterred analysts, as an overwhelming majority remain positive on the stock's prospects.

Strong Analyst Consensus

The sentiment among the analyst community for Reliance Industries remains overwhelmingly positive. Out of 37 analysts who cover the stock, 35 have a "buy" rating. Only two analysts have issued a "sell" rating. CLSA is now the eighth brokerage firm to set a price target of ₹1,800 or higher, reinforcing the strong conviction in the company's growth story. This widespread bullishness underscores the market's confidence in RIL's ability to navigate challenges and capitalize on future opportunities.

Robust Financial Performance

Reliance Industries' recent financial results support the positive outlook. For the December quarter, the company reported consolidated revenue of ₹2.65 trillion, an increase from ₹2.55 trillion in the preceding quarter. This growth was primarily led by a strong performance in its core Oil-to-Chemicals (O2C) business. The retail segment also demonstrated healthy expansion, with revenue growing by 8.4% during the quarter. This growth was attributed to the demerger of the consumer products portfolio, a strong festive season, and favorable GST rate rationalization.

Future Growth Engines

Beyond the established O2C, telecom, and retail businesses, CLSA identifies several other areas that could contribute to future value creation. The note highlights potential growth in emerging sectors such as quick commerce, the expanding Fast-Moving Consumer Goods (FMCG) portfolio, and the media business. These ventures represent new frontiers for RIL and are expected to become more significant contributors to the company's overall revenue and profitability in the coming years.

Conclusion

CLSA's decision to raise its price target for Reliance Industries to ₹1,800 underscores a strong belief in the conglomerate's value, particularly the untapped potential within its digital arm, Jio. While the stock has undergone a healthy correction from its peak, the underlying business fundamentals and the overwhelming positive analyst consensus suggest a robust long-term outlook. Investors will be closely watching for any official announcements regarding the Jio IPO, which is poised to be a major market event and a key catalyst for RIL's stock.