Citi upgrades Reliance Industries rating to 'Buy,' raises target price to Rs 1,530

Reliance Industries Ltd’s shares surged as much as 3% on Monday to Rs 1302.7 on BSE, after Citi upgraded the stock to a "Buy" rating, increasing its target price to Rs 1,530, citing favourable risk-reward dynamics after a 20% underperformance against the broader Indian market over the last six months.

Citi’s latest report highlights an optimistic outlook for Reliance Industries, driven by a combination of improving refining margins and growth prospects in its telecom arm, Jio. The investment bank believes the company's valuation is now compelling, given its recent lag behind the Indian stock market.

One of the key factors influencing the brokerage’s upgrade is the expected improvement in refining margins. With China's export competitiveness diminishing, RIL's refining segment is poised to benefit, potentially boosting its overall profitability.


The brokerage report also emphasises Jio's strong positioning, particularly with future tariff hikes on the horizon. Citi anticipates that Jio could capitalise on opportunities to enhance data pricing or monetize its burgeoning 5G network more effectively, solidifying its leadership in India's telecom sector.

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However, the retail segment may remain a drag on the company's performance in the near term. Citi foresees continued softness in retail earnings for another two quarters, prompting it to pare down estimates for the division.

Despite these headwinds, Citi’s upgrade reflects confidence in RIL's diversified business model and its ability to navigate sector-specific challenges. The revised target price represents a significant upside from its current levels.

Reliance Industries posted a 9.4% sequential growth in its July-September net profit to Rs 16,563 crore, buoyed by a solid performance in its telecom and retail segments. Revenue from operations was Rs 2.35 lakh crore for the September quarter, marginally below than the Rs 2.36 lakh crore reported in the previous quarter.

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