Here's why foreign brokerages see up to 36% upside in RIL; Q3 nos on Jan 16

Goldman Sachs, Bernstein, CLSA and Jefferies have retained their positive rating on RIL and believe the selling in the stock is overdone at present levels.

Reliance Industries (RIL) stock has been in focus given the significant underperformance of the index heavyweight over the last six months. RIL had tumbled over 25 per cent from its peak of Rs 1,617 in July to a low of Rs 1,201. In comparison, the BSE and NSE benchmark indices declined around 6 per cent in the same period.  Off late, RIL stock seems to be finding support around its 200-WMA (Weekly Moving Average) and the super trend line on the monthly scale, which stands at Rs 1,200 and Rs 1,198, respectively. The stock has respected the monthly super trend line support for nearly 11 years now. The stock last traded below the monthly super trend line in April 2014.  On Friday at 10:20 AM; Reliance stock was seen trading with a loss of 1 per cent at Rs 1,242 on the BSE on trades of around 136,000 shares. In comparison, the BSE Sensex was down 0.3 per cent or 260 points at 77,350 levels.  Technically, RIL stock needs to break and sustain above Rs 1,270 for the sentiment to turn favourable at the counter. On the upside, the stock can spurt to Rs 1,360; above which a rally towards the 200-day SMA (Simple Moving Average) at Rs 1,420 cannot be ruled out. LINK  Meanwhile, the company in an exchange filing said it will be announcing its December quarter (Q3FY25) earnings on Thursday, January 16, 2025.  Ahead of the earnings, given the stock underperformance, several overseas brokerages have turned bullish on the stock, and see up to 36 per cent upside on the stock.  Goldman Sachs: Sets RIL 12-month target at Rs 1,595  Analysts at Goldman Sachs believe that the sell-off in RIL stock is overdone as the share price now trades near its bear case scenario. The bear case valuation is considered assuming lower for longer refining margins, weak telecom ARPU (Average Revenue Per User)/ subscriber growth and lower TAM (Total Addressable Market)/ market share growth in retail.  In its note on Reliance Industries, Goldman Sachs explains that as per their historical NAV analysis, RIL's current implied discount to overall NAV of 26 per cent compares with a 13 per cent average over 10 years.  On the earnings front, Goldman expects FY26E EBITDA to grow 24 per cent YoY and consolidated CROCI (Cash Return on Capital Invested) to expand 110/ 75 bps in FY26E/ FY27E driven by (1) constructive view on refining margins (large permanent capacity closures in CY25), (2) another telecom tariff hike in FY26E, (3) return of retail top-line growth from FY26E (improving macro and post operations restructuring), and (4) potential start of the new energy  giga complex.    Goldman Sachs, thus has retained its 'Buy' rating on RIL stock but lowered its FY25E-27E EBITDA by up to 4 per cent with a revised 12-month SOTP-based target price of Rs 1,595 as against Rs 1,630 earlier; implying a XXX per cent upside from present levels.  CLSA, Jefferies, Bernstein reiterate Outperform/ Buy rating  Hong Kong-based CLSA too has reiterated its 'Outperform' recommendation on RIL stock with a target price of Rs 1,650, reflecting an upside of 32.96 per cent. Analysts at CLSA believe that after a major underperformance in 2024, the stock has reached a conservative value, presenting a compelling entry point for potential gains as key developments unfold in 2025.  Similarly, New York-based Jefferies retained a 'Buy' with a target price of Rs 1,690, reflecting an upside of 36.19 per cent from current levels. As per reports, Jefferies expects mid-teens growth in the company's retail segment, the potential listing of Reliance Jio, and improved profitability in the Oil-to-Chemicals (O2C) segment in FY26.  Meanwhile, Bernstein has set a target price of Rs 1,520, while reiterating its 'Outperform' rating on RIL. The global brokerage firm RIL's earnings to be driven by a 12 per cent increase in Jio's ARPU even without tariff hikes, the retail business returning to double-digit earnings before interest, tax, depreciation and amortisation (Ebitda) growth, and an improvement in the company's Gross Refining Margin (GRM).