Key facts
- Reliance Industries shares have surged 6% in three days, adding over Rs 1 lakh crore in market value.
- Morgan Stanley maintains an 'Overweight' rating on RIL with a target price of Rs 1,803, suggesting 38% upside.
- The brokerage cited stronger Oil to Chemicals (O2C) earnings, new energy monetization, and AI investments as key growth drivers.
- Reliance Industries' AGM is scheduled for Friday, where investors anticipate updates on growth plans and business strategies.
Reliance Industries (RIL) shares have experienced a significant rally, climbing 6% over three trading sessions and adding more than Rs 1 lakh crore to its market capitalization. This surge comes just ahead of the company's 49th Annual General Meeting (AGM) scheduled for Friday. Despite the recent gains, global brokerage firm Morgan Stanley has reiterated its 'Overweight' rating on RIL, setting a target price of Rs 1,803 per share, which implies a potential upside of 38% from current levels.
Morgan Stanley's bullish outlook is underpinned by several growth factors. The brokerage anticipates structurally stronger earnings for Reliance's Oil to Chemicals (O2C) business, driven by energy security policies and tighter refining markets, even with higher logistics costs. They highlighted RIL's strategic advantages in processing heavy and sour crude grades, accessing cheaper feedstocks, and maintaining a diversified crude sourcing portfolio. The recovery in the chemical cycle, supported by advantaged feedstocks from US ethane and captive naphtha, is also expected to boost earnings.
Beyond its core energy business, Morgan Stanley pointed to the ongoing "Monetisation 4.0" phase, with the ramp-up of solar module and cell manufacturing, and energy storage production. The firm believes these new energy investments are not yet fully reflected in RIL's current valuations. Additionally, Reliance's investments in AI monetization and data centers present a potential "show me" story for investors. The brokerage noted that RIL is trading at an attractive valuation of 1.1x EV/IC, representing a 68% discount compared to its domestic peers across various verticals, a valuation gap last seen in 2018 before a period of significant outperformance.
The upcoming AGM is a key event for investors, who are awaiting updates on the conglomerate's strategic growth plans. Key areas of interest include the potential IPO of Jio Platforms, the expansion strategy for its retail business, and progress in its new energy ventures. Chairman Mukesh Ambani's address is expected to provide significant insights into the company's future direction and performance.