India's most trusted stock wipes out nearly Rs 3 lakh crore this year. Is RIL still a value bet?

Reliance Industries, one of India's most valuable companies, has erased nearly Rs 3 lakh crore in investor wealth so far this year as the stock continues to lag amid weak refining margins, heavy capital expenditure and a lack of near-term catalysts.

Shares of the Mukesh Ambani-led conglomerate have fallen roughly 11% in 2026 so far, translating into a sharp decline in market cap for a company valued at close to Rs 19 lakh crore. The slide is frustrating for investors who expect the company's diversified business model to provide resilience even during volatile market conditions.

What's behind the slump?

Analysts say the underperformance is not the result of a deterioration in the company's core businesses, but rather a combination of macro pressures and a transition phase across several of its growth engines.

Ravi Singh, chief research officer at Master Capital Services, said the stock has been weighed down by pressure in the refining and petrochemicals segment as well as the impact of large investments in new businesses that have yet to contribute meaningfully to earnings.

"With about 11% decline already this year, Reliance has lagged primarily because refining and petrochemical margins have softened while the company continues to invest heavily in new energy projects," Singh said. He added that while Jio continues to dominate the telecom market, the monetisation of its 5G network and improvement in average revenue per user are progressing more gradually than investors had anticipated.

Reliance Industries today operates across multiple sectors, including oil refining and petrochemicals, telecom services through Reliance Jio, retail through Reliance Retail and emerging energy businesses focused on solar, hydrogen and battery technologies. This diversification has historically helped the company generate strong cash flows and sustain growth across business cycles.

However, analysts say that the sheer scale of the company now makes it harder for incremental developments to move the stock meaningfully.

Paresh Bhagat, chief investment officer at Veer Growth Fund (AIF) and chairman at Mangal Keshav Financial Services, said Reliance’s large market capitalisation means the company requires massive value creation to trigger a strong rerating.

"At roughly Rs 19 lakh crore market cap, even a 10% move requires the company to create nearly Rs 1.9 lakh crore of incremental value. That is larger than the entire market cap of many large listed companies," Bhagat said. He noted that smaller positives, such as the renewal of the US licence allowing imports of Venezuelan crude oil, may support margins in the oil-to-chemicals business but are unlikely to be strong enough on their own to drive a major rerating in the stock.

Next generation growth engines in transition phase

At the same time, the company's next generation growth engines are still in a transition phase. Reliance has invested heavily in its new energy platform, committing significant capital to build solar, battery storage and hydrogen manufacturing capacity. These projects, however, are still in the development stage and are unlikely to contribute significantly to profits in the near term.

Thomas Abraham, research analyst at Mirae Asset ShareKhan, said the company's large capital expenditure programme has been a key factor behind the stock's muted performance. "Reliance's recent weakness stems from high capex with low immediate returns.

The growth in new energy platforms such as solar, storage and green hydrogen is expected to drive earnings upgrades in the medium to long term, but the investments are yet to translate into profits," he said.

Reliance invested around Rs 1.3 lakh crore in FY25 across new energy and digital platforms, part of a broader strategy to transition away from traditional fossil fuel businesses toward cleaner energy and technology-driven services.

Meanwhile, some of the company's consumer-facing businesses have also faced short-term pressures. Reliance Retail continues to expand rapidly, but analysts say revenue momentum has slowed in recent quarters and the quick commerce segment under JioMart remains loss-making.

JioMart is facing intense competition from fast-growing rivals such as Blinkit, Zepto and Swiggy Instamart, which has increased customer acquisition costs and delayed profitability in the segment.

Core business intact

Despite these challenges, analysts maintain that the company's core businesses remain financially strong and capable of supporting future growth. Gaurav Bhandari, chief executive officer of Monarch Networth Capital, said the recent decline in the stock reflects broader market risk aversion and profit booking rather than structural weakness.

"Some segments such as energy and chemicals have faced near-term margin pressures, but other parts of the business, particularly retail and digital services, continue to execute steadily," he said.

Bhandari added that Reliance's diversified business structure provides multiple engines of cash flow and growth. Refining operations remain a major earnings contributor, while retail expansion and digital services continue to generate steady revenue growth.

Valuations have also become more reasonable following the correction. According to Bhandari, at current levels the stock appears reasonably priced relative to its long-term earnings potential and could offer support for investors with a longer investment horizon.

Santosh Meena, head of research at Swastika Investmart, said the recent weakness could present a buying opportunity, especially, during the current Middle East crisis, for investors who believe in the company’s long-term transformation.

"The company is steadily transitioning from its legacy energy business toward high-growth segments such as telecom, retail and new energy," Meena said. He noted that Reliance has historically gone through cycles of heavy investment followed by monetisation phases, such as the stake sales in Jio and retail platforms in previous years.

According to Meena, the next monetisation cycle could emerge as the company's investments begin translating into earnings growth over the next few years. Potential triggers include the operationalisation of new energy gigafactories at Jamnagar, expected around 2026, as well as possible listings of Reliance Jio and other consumer businesses.

In the near term, improvements in telecom tariffs and higher average revenue per user could also support earnings growth. Still, analysts caution that the stock may remain range-bound until clearer signs of earnings acceleration emerge.

Singh said investors should expect some volatility in the near term as the company navigates margin pressures and high capital expenditure. However, he believes Reliance continues to remain a core long-term holding for investors seeking exposure to India’s consumer, telecom and energy transition themes.

The ongoing US-Iran war could also be a short term cushion for investors looking at the stock. Rising crude prices could benefit energy companies involved in exploration and production. Nomura has maintained a positive view on Reliance Industries, which it expects to benefit from higher refining margins and inventory gains during periods of rising oil prices.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)