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Reliance Industries Limited (RIL), led by Mukesh Ambani, is set to enter a recovery cycle, with its EBITDA projected to grow by 19% or more in FY26, according to Bernstein Research. The brokerage firm anticipates significant earnings growth driven by the telecom and retail segments, alongside a rebound in refining margins.
12% ARPU Growth: Jio’s Average Revenue Per User (ARPU) is expected to rise by 12% without tariff hikes, alongside subscriber growth of 4-5%.
Market Share Expansion: Jio is projected to reach 500 million subscribers and capture 48% of the revenue share by FY26.
Revenue Growth: Jio is anticipated to achieve a 17% compound annual growth rate (CAGR) in revenue over the next three years.
A recovery in retail is expected after challenges due to store rationalization and macroeconomic factors. Retail EBITDA is forecasted to return to double-digit growth, with the segment achieving 15% growth in FY26.
Gross refining margins (GRMs) are set to rebound, growing by 5.4% year-over-year in FY26. Improved GRMs and a weaker Indian Rupee will benefit EBITDA margins.
Continued expansion in solar and battery capacities within the New Energy segment. Stable valuation of refinery and petrochemical businesses at 7.0x FY26 EV/EBITDA.
Since September 2024, RIL has seen a $50 billion drop in market capitalization, driven by a 13% reduction in EPS and a 10% decrease in consensus EBITDA. RIL is currently trading at 10.1x 1-year forward EV/EBITDA, a 17% discount compared to its 3-year average.
Bernstein has revised its target price for Reliance Industries to Rs 1,520, implying a 25% upside.
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