Mukesh Ambani Led Reliance Industries Surges As Goldman Sachs Raises TP; Sees 54% Upside By 2026

The share price of Reliance Industries Ltd. (RIL) surged over a percent during early trade on Wednesday following an optimistic update from foreign brokerage giant Goldman Sachs. The firm has revised its target price on the stock, anticipating substantial growth and potential upsides in the coming years.

Goldman Sachs has projected an impressive target price of Rs 4,495 per share for RIL in its bull case scenario for the financial year 2026, indicating a remarkable potential upside of approximately 54%. This bullish outlook reflects the brokerage's confidence in the conglomerate's trajectory and strategic initiatives.

Maintaining a 'BUY' rating on Reliance Industries, Goldman Sachs has adjusted the price target to Rs 3,400 from Rs 2,925, marking a notable 17% potential upside from Tuesday's closing price. CNBC-TV18 reported this development, highlighting the firm's positive stance on RIL's performance and growth prospects.

The brokerage house's confidence stems from several factors, including the favorable risk-reward profile of Reliance and the anticipated value accretion from the Reliance-Disney joint venture. Goldman Sachs foresees an expansion in Reliance's Cash Return on Cash Invested (CROCI) by nearly 270 basis points to 12% in FY2027, further bolstering its optimism.

Reliance shares have historically outperformed the Indian market under specific conditions outlined by Goldman Sachs, namely, expanding returns and valuation discovery through stake sales in newer businesses. The brokerage anticipates a continued rise in returns compounded by potential value unlock through listings of consumer businesses in the future.

Goldman Sachs predicts a positive trajectory for Reliance Industries, expecting consolidated free cash flow to turn positive by FY2025 and a significant 20% year-on-year (YoY) expansion in EBITDA. This growth is attributed to various factors, including a telecom tariff hike, robust retail same-store sales growth, and a recovery in chemical margins.

The firm anticipates a robust EBITDA CAGR between FY2024 - FY2027, driven by a doubling of retail EBITDA, a 22% CAGR in the telecom business, petrochemical margin recovery, and sustained strength in diesel cracks. The report underscores the potential of Reliance's new ventures, particularly in Retail and New Energy, which are expected to be less capital-intensive, yield higher returns, and have shorter gestation periods.

Reliance Retail's EBITDA is forecasted to nearly double between FY2024 - FY2027, with its share of consolidated EBITDA increasing substantially. Similarly, the New Energy vertical is expected to contribute positively to EBITDA from FY2025 onwards, reaching $2.3 billion by FY2030, according to Goldman Sachs.

The market responded favorably to these projections, with Reliance Industries' shares trading with gains of nearly 4% at Rs 2,989 per share on the National Stock Exchange (NSE) as of 1:45 pm. This surge adds to the stock's impressive performance, with an over 11% increase in the past three months and a remarkable 30% surge over the past year.