Reliance Industries shares set for re-rating? Target price, what history suggests

Equirus Securities in a note on Thursday said downside risks for the Mukesh Ambani-led Reliance Industries Ltd (RIL) are largely priced in, while catalysts for re-rating are emerging, including improving oil-to-chemical (O2C) profitability, value unlocking in Jio, resilient Retail growth and new energy projects that will start contributing in next few quarters. 
Equirus said derating on RIL has pushed its valuation metrics to attractive levels, with forward PE compressing to 19 times against an average of 21 times and EV/Ebitda now at 9.9 times. 

RIL target price

"Reliance has materially underperformed broader market since Jan’26, correcting 20 per cent versus 11 per cent decline in Nifty, rare divergence for a stock of its benchmark significance during earning upgrade cycle," Equirus said.

Equirus said medium-term underperformance, near term positive earnings surprise in O2C and valuation near to post Covid low make risk-reward equation favourable. It upgraded the stock to 'LONG' from 'ADD' with September 2027 target of Rs 1,586, hinting at 26 per cent potential upside.  

RIL: What history suggests 
Equirus said across three decades, RIL's asset base & market capitalisation have moved in near-perfect lockstep with a  correlation of nearly one. 

A meaningful rerating, it said, has historically required a large, transformative capex cycle. It noted that m-cap to assets for RIL expanded from 0.4 times to 1.9 times by FY08 following Jamnagar expansion, while ratio rebounded from 0.5 times during Jio buildout phase to 1.2 times by FY22 as earnings got reflected. 

"In contrast, current phase lacks a comparable capex intensity. While assets have grown 45 per cent during FY22-26, annual capex has largely remained in the 6-9 per cent of asset base range, below prior mega-investment cycles that typically saw capex intensity move into double digits for sustained periods," Equirus said.

It said m-cap for RIL has remained broadly flat, compressing m-cap to assets to near a six-year low. Since RIL's history suggests that outsized equity returns generally follow periods of aggressive asset creation, without a step-up in capex intensity, conditions for another major rerating remain still absent, Equirus said.

"Reliance's valuation mix has structurally shifted, yet market still prices it like a refining-heavy conglomerate. Telecom and Retail together now account for over 65 per cent of enterprise value (EV), while O2C, historically valuation anchor, has structurally reduced to 22 per cent. 

JIO IPO preparations underway

Equirus expects consolidated Ebitda for RIL to compound at 7 per cent over FY26–28E driven almost by Telecom (11 per cent CAGR) and Retail (13 per cent CAGR), with O2C contributing incremental recovery (7 per cent).  

"Jio remains group's most predictable earnings engine. Subscriber base reached 52.4 crore at FY26-end (up 7 per cent YoY), while ARPU has expanded from Rs 150 in FY22 to Rs 214 currently. With the last tariff hike nearly two years ago and IPO preparations underway, further ARPU-led monetisation remains a key earnings lever and expect that to happened next 2 quarters," it said.

New Energy biz under-appreciated
Equirus said RIL's Green Energy Giga Complex has slightly moved from investment phase to execution. During FY26, it operationalised core manufacturing assets, delivered its first 200 MWp of high-efficiency HJT solar modules, while progressively commissioning integrated cell and module lines. 

"40 GWh LFP battery gigafactory has entered advanced commissioning and is expected to ramp up production through 2HCY26, with modular expansion potential to 100 GWh. Electrolyser gigafactory is targeted to commence production by end-CY26. Simultaneously, development of Kutch renewable energy ecosystem continues at scale. In our SOTP, we value New Energy at Rs 1,20,000 crore (investment value at 1.5x)," it said.