The market has once again welcomed Reliance Industries [NSE: RELIANCE] as the showstopper, indicating major chances of stock re-rating after the company remained overshadowed for the last three to five years, as reflected in its low return on equity of 8.89% and poor sales growth of 10.1%. The possibilities seem to arise after the company announced its Q4 results on April 28, 2025, which stated the consolidated profit figure for the fourth quarter of FY25 as ₹19,407 crore.
RIL: A Decade of Transformation
Reliance Industries started as a legacy business, known for its dominance in refining and petrochemicals. It operated one of the world’s largest refineries in Jamnagar and had a tightly integrated energy-to-materials business. Recognising the limits of cyclical refining margins and fossil fuel volatility, RIL began deploying massive capex toward telecom (Jio) and retail, marking an overall structural shift toward consumer and digital businesses.
- Reliance launched Jio in 2016, disrupting the Indian telecom market with free voice calls and cheap data, leading to exponential subscriber growth.
- Reliance Retail aggressively expanded its footprint, acquiring urban and rural formats, building supply chain infrastructure, and launching e-commerce initiatives (e.g., JioMart).
- Refining and petrochemicals remained a stable source of cash cows, funding the new-age businesses.
RIL attracted over ₹2 trillion in equity investments across Jio Platforms and Retail Ventures from global giants like Facebook (now Meta) [NASDAQ: META], Google [NASDAQ: GOOG], Silver Lake [ASX: SLR], and KKR [NYSE: KKR]. This not only helped the company reduce debt but also validated its strategy and provided optionality for eventual IPOs or demergers.
Reliance Industries Stock Outlook: Past Performance and Key Insights
From 2015 to 2020, RIL significantly outperformed the Nifty 50 as Jio and Retail gained traction and the market began pricing in the success of its consumer pivot. Between 2017 and 2020, the stock more than tripled, while the Nifty rose modestly. From 2020 to 2022, peak optimism led to RIL becoming the first Indian company to cross ₹15 lakh crore in market cap. The investments from global tech and PE players in Jio/Retail drove strong sentiment.
However, from 2022, market concerns over slow monetisation of Retail and Jio, delay in IPOs, execution risk in green energy, and rising global interest rates impacted re-rating potential.
Why FY26 is the Best Time for Re-Rating?
FY26 seems to mark the culmination of extensive capital expenditures and the onset of significant revenue generation across its diversified business segments. Reliance stock re-rating reasons include the following:
Capex to Cash Flow Shift: Over the past decade, RIL has invested over $125 billion, primarily in hydrocarbon and telecom sectors, which are capital-intensive with extended gestation periods. The completion of the 5G rollout and the peak of capex intensity in the oil-to-chemicals (O2C) division are expected to transition into sustained cash flows, enhancing profitability.
Operational Leverage: In retail, RIL has expanded its offline presence from 34 million to 73 million square feet between FY21 and FY24. This expansion, coupled with investments in omnichannel capabilities, is projected to nearly double retail EBITDA between FY24 and FY27. Similarly, Jio’s subscriber base is expected to reach around 500 million by FY26, with a 14%+ increase in average revenue per user (ARPU).
Green Energy Monetisation: RIL’s Dhirubhai Ambani Green Energy Giga Complex, one of the Reliance Industries future plans, in Jamnagar is set to commence production of solar photovoltaic modules by the end of FY25. The company aims to scale up to a 100 GW renewable energy capacity by 2030, with plans to transition from grey to green hydrogen by 2025.
Reliance Industries FY26 growth will be initiated by substantial investments transitioning into operational scale and profitability across its core business segments.
Re-Rating Catalysts
The re-rating of Reliance Industries (RIL) will be driven by strategic initiatives across its diversified business segments.
Valuation Unlock: RIL plans to list its telecom arm, Jio, in 2025, with an estimated valuation exceeding $100 billion. However, the retail IPO is deferred beyond 2025 due to internal operational enhancements. These listings are expected to narrow the holding company discount, unlocking substantial value for shareholders.
Growth Visibility: Chairman Mukesh Ambani anticipates that by FY26, all key growth engines, including O2C, Retail, Jio, Media, and New Energy, will be operating at scale. Jio and Retail are projected to double their revenues and EBITDA in the next three to four years, positioning RIL for accelerated growth.
ESG Tailwinds: RIL is committed to achieving net-zero carbon emissions by 2035, with a target of 100 GW of renewable energy capacity by 2030. The company is investing ₹75,000 crore in clean energy initiatives, including solar, battery storage, and green hydrogen projects. Additionally, RIL has secured a $434.4 million incentive under India’s Production-Linked Incentive (PLI) scheme to manufacture electric vehicle (EV) batteries, aligning with the government’s goal to increase EV adoption.
What Investors Must Know?
RIL is set to unlock significant value through the planned IPO of its telecom arm, Jio, in 2025. Analysts estimate Jio’s valuation at approximately $112 billion, which could lead to a 13-18% upside in stocks per Reliance share price forecast, depending on the structure of the spin-off. In addition, after years of substantial capital expenditures, RIL is transitioning towards generating robust free cash flows, which could enhance shareholder returns and reduce leverage, positioning the company for sustainable growth. For investors seeking exposure to a diversified conglomerate with strong growth prospects and strategic initiatives, RIL presents a compelling investment case.
While Reliance Industries Ltd. (RIL) is well-positioned for long-term growth, several risks remain, which include the following:
- Execution risk looms large over its ambitious green energy plans, including solar, hydrogen, and battery projects, which require advanced technologies and timely scaling.
- Regulatory scrutiny could intensify, particularly around Jio’s dominance in telecom and Reliance Retail’s market influence, potentially affecting operations or delaying IPOs.
- The O2C business remains vulnerable to global commodity price volatility and currency fluctuations, impacting margins and cash flows.
Investors must keep these factors driving Reliance stock in mind before investing, as they play a key role in determining near-term investor sentiment.
Conclusion
Though Reliance Industries (RIL) has consistently outperformed traditional energy peers like ONGC [NSE: ONGC] and BPCL [NSE: BPCL] by transforming into a diversified conglomerate with strong retail and digital businesses, the company has been struggling to retain its top position in the market over the past three years. The high expenditure on the new energy initiatives, growth moderation in its retail segment, and downgrading overall earnings have been the major reasons behind their underperformance.
However, RIL, with its Q4 results announced, is staging a strong comeback, reviving investor interest through potential IPOs (Jio, Retail), robust earnings across segments, and green energy investments. This strategic pivot has yet again positioned RIL as a growth-driven, future-ready enterprise rather than just an energy major.
