JPMorgan raises Reliance Industries price target to INR1,695 on telecom strength

JPMorgan has raised its price target for Reliance Industries to INR1,695 from INR1,568, maintaining an Overweight rating, following the company's mixed first-quarter results. Despite adjusted profit after tax being below estimates and decelerated retail growth, the upgrade is primarily driven by better-than-expected telecom margin expansion and increased visibility on its New Energy segment's capital expenditure. JPMorgan anticipates improved profit growth for Reliance in fiscal years 2026 and 2027, underpinning the forward-rolled valuation.

Analysis

JPMorgan has reaffirmed its confidence in Reliance Industries by raising its price target to INR 1,695 and maintaining an Overweight rating, despite a mixed first-quarter performance. The company's adjusted profit after tax (PAT) missed JPMorgan's forecast by 6%, though it did achieve a notable 19% year-over-year increase. The upgrade is underpinned by a forward-looking perspective, focusing on two key positive developments that overshadowed the misses. Specifically, the telecom business delivered a 124 basis point quarter-over-quarter margin expansion that surpassed expectations, and the firm cited increased visibility into the capital expenditure plans for the strategic New Energy segment. These strengths were sufficient to offset the negatives, which included a deceleration in retail growth to 11% year-over-year and weaker-than-anticipated EBITDA from the Oil-to-Chemicals (O2C) division. The analyst's valuation is now rolled forward to September 2026, indicating a belief that improved PAT growth will materialize in fiscal years 2026 and 2027.

Key Decisions for Investors

• Investors should view JPMorgan's price target increase as a signal of conviction in Reliance's long-term growth story, particularly in its telecom and New Energy segments, despite current headwinds in retail and chemicals.
• It is crucial to monitor the execution and margin trajectory of the telecom division and any further disclosures on the New Energy segment's capital deployment, as these are the primary drivers of the upgraded forecast.
• Consider the risk posed by the underperformance in the retail and O2C segments; continued weakness in these core areas could challenge the optimistic forward-looking profit projections.