Shares of Reliance Industries could rise 20%, according to Shrikant Chouhan of Kotak Securities.
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India’s largest business group, Reliance Industriesis struggling with geopolitical headwinds in oil refining and, reportedly, one of its new energy ventures. But this is not the biggest concern of the oil-telecom conglomerate.
A slowdown in the retail business, the group’s third-largest vertical, has prompted analysts to maintain a buy rating on Reliance shares, but cut revenue forecasts and lowered the stock’s target price.
Reliance Retail’s revenue grew just 8.1% year-on-year and its earnings before interest, taxes, depreciation and amortization, or EBITDA, improved just 2% in the latest quarter, raising doubts about its ability to deliver higher growth.
“We are confident of delivering 20%+ plus CAGR (compound annual growth rate) in retail revenue over the next three years,” Isha Ambani, who heads the retail business, told shareholders at the company’s annual meeting last year.
Macquarie Capital delisted Reliance from Asia Marquee. In a report on Monday, Reliance Retail said the slowdown in growth is a “major deviation factor” in the group’s unit sales estimate.
Citi cut its target price to 1,815 rupees ($19.9) per share from 1,860 rupees, while UBS cut it to 1,790 rupees from 1,820 rupees. UBS expected the retail business to grow 10% year-on-year in the December quarter.
Ahead of the festive season, in September the Indian Govt cut off tax rates on goods and services to encourage domestic consumption. But the increase in demand was not uniform across the segments with sales gold and machines rose in the December quarter, while fashion and consumer products reported mild growth.
“We don’t see a near-term catalyst for consumer demand growth and are pessimistic going into 2026. While we hope for a delayed effect of stimulus measures, we expect at best a gradual recovery rather than a sharp rebound,” Bernstein said in a note earlier this week.
Reliance Retail partners such as Avenue Supermarkets and Tata Group’s Trent also reported slower growth in the December quarter. Reliance said last year’s festive season demand was split between the second and third quarters, resulting in softer growth numbers.
Reliance Retail also argued that its December results were not comparable on a year-on-year basis as its consumer core business was spun off and is now a direct subsidy of Reliance Industries.
The core consumer business totaled 50.65 billion rupees ($556.8 million), or about 5 percent of Reliance Retail’s 976 billion rupees in revenue in December.
Brokers see the December results as a secular downtrend rather than a growth spurt for the company. Citi on Monday cut Reliance’s consolidated EBITDA estimate to 1%-2% for fiscal 2026 to 2028, citing “moderation” in retail sales.
Shares of Reliance Industries have lost about 5% since the earnings announcement, although the company’s core refining business appears to be doing well in a tough business environment and its large telecom business has reported steady growth.
Weather headwinds
I had to believe reduction On imports of cheap Russian oil like the US loaded Sanctions on oil companies Rosneft and Lukoil, one of which had a long-term supply contract with an Indian firm.
The company was one of the largest consumers of Russian crude oil, accounting for 40% to 45% of the crude mix, said Pankaj Srivastava, Rystad Energy’s senior vice president of crude oil markets.
Goldman Sachs said in a report on Monday that EBITDA for its petrochemicals business, which includes the refining and petrochemicals sectors, rose 15% year-over-year and that “(margin) strength in refining more than offset lower Russian crude consumption, higher cargo volumes and weaker petchem.”
Geopolitical concerns also seem to have affected the company’s new energy business. Last week, Bloomberg reported that the company’s plan to build a battery storage plant with an annual capacity of 40 gigawatts has come to fruition. hold on. The report said that the Indian company could not buy technology from China due to Beijing’s restrictions on technology transfer.
During the earnings call, the company denied any delays in the project. Karan Suri, senior vice president of the new energy business, said the company is “advancing rapidly in building our 40-gigawatt battery storage plant and that startup will happen in the next few quarters.”
Unaffected by domestic consumption issues or geopolitical tensions, Reliance’s telecom business continued to deliver solid performance in line with expectations from brokerages such as UBS and Citi.
This year, the business looking to list has reported 12.7% year-on-year revenue growth and 16.4% EBITDA growth. It added 8.9 million customers in the quarter, bringing its total subscriber base to 515 million.