Citi Bullish on Reliance Industries; sets ₹1,585 target on six growth drivers

Shares of Reliance Industries (RIL) could rise as much as 12 percent from current levels, Citi Research said in a recent note, reiterating its ‘buy’ call on the Nifty 50 heavyweight. The brokerage assigned a target price of ₹1,585, citing six potential catalysts across the conglomerate’s core business segments that could drive the stock higher in the near term.

At current levels, the target implies an upside of 12 percent for India’s most valuable company. According to Citi, a combination of operational recovery, structural shifts, and anticipated announcements could support investor sentiment and stock performance over the coming months.

Stock Price Trend

Reliance Industries' share price remained largely unchanged over the past year, gaining just 1 percent. In May so far, the stock edged up 1.2 percent, building on an over 10 percent rally in April and a 6 percent rise in March. This followed a 5 percent decline in February, while in January, the stock had added 4 percent.

At current levels, the stock was trading 12 percent below its record high of ₹1,608.95, touched in July 2024. However, it has rebounded 27 percent from its 52-week low of ₹1,115.55, hit in April 2025.

Investment Rationale

Oil-to-Chemicals Business Recovery: Citi highlighted an improving outlook for RIL’s Oil-to-Chemicals (O2C) segment, driven by strengthening refining margins, rising domestic fuel retail margins, and modest gains in petrochemical spreads. The brokerage noted that Singapore gross refining margins (GRMs) had rebounded above $6 per barrel, compared to a two-quarter average of around $4, largely due to supply disruptions in Nigeria and lower diesel exports from China.

Citi also expects stronger domestic fuel retailing margins to add over $1 per barrel at current spot levels, nearly double the FY25 average. Additionally, falling input costs have supported a mild recovery in petrochemical spreads.

Favourable YoY Comparisons in Q1FY26: The firm expects base effects to play in RIL’s favour in the June quarter of FY26, especially given the weak performance in the same quarter last year. The Q1FY25 period had seen sluggish performance across O2C, Retail, and Jio, making for a low comparison base. Citi believes this could result in a strong year-on-year rebound in earnings.

Potential AGM Announcements: Citi flagged Reliance’s upcoming Annual General Meeting (AGM) as another potential trigger. The brokerage said any updates regarding the timeline for Jio’s listing could shift market sentiment positively. While last year’s AGM had limited impact, Citi believes clarity around the listing of Jio Platforms could act as a significant re-rating factor.

Retail Segment Revival: RIL’s Retail arm is witnessing signs of recovery after a muted first half of FY25, which was marked by store rationalisation. According to Citi, the grocery segment continues to perform strongly, delivering double-digit like-for-like (LFL) growth across both urban and metro markets.

The brokerage projects that RIL’s overall Retail revenue will grow at a compound annual growth rate (CAGR) of 15 percent over the next two to three years, sharply higher than the 7 percent growth recorded in FY25.

5G Monetisation Potential: Citi sees upside from Jio’s large 5G user base, which currently constitutes about 40 percent of its mobile subscriber base—or 191 million users. Notably, around 45 percent of total mobile data traffic is already on the 5G network.

However, this capacity remains largely unmonetised. Citi believes managemen

t will soon turn its focus toward generating revenue from the 5G rollout, which could add a new layer of profitability to Jio’s telecom business.

Capex and Net Debt Management: Lastly, the brokerage noted that Reliance’s capital expenditure and net debt remained relatively stable over FY24 and FY25. If this trend continues, Citi expects a gradual reduction in overall capex intensity and net debt levels—especially in the Jio segment—leading to improved balance sheet strength.

Valuation and Risks

Citi’s ₹1,585 price target is based on a sum-of-the-parts (SOTP) valuation model. It assigns ₹375 per share to the O2C business, ₹523 to Jio, and ₹623 to the Retail segment. Other components include ₹25 for the company’s exploration and production (E&P) assets, ₹51 for new energy investments, and ₹75 for other businesses. These are adjusted for ₹75 per share in net debt.

However, Citi flagged several risks that could impact its bullish outlook. These include a potential weakening in refining margins, reintroduction of windfall taxes, limited progress in new energy initiatives, rising non-core investments, and the risk of a holding company discount.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.