On Tuesday, HSBC updated the price target for Reliance Industries (RIL:IN), increasing it to INR 3,010.00 from the previous INR 2,780.00, while retaining a Hold rating on the stock. The adjustment reflects a positive outlook on the company's business structure and financial health.
The analyst praised Reliance Industries' three core sectors: Oil to Chemicals (O2C), retail, and digital services, noting that they have become self-sustaining and cash-generating entities. The retail and digital services segments, in particular, are witnessing robust growth. However, the O2C segment is expected to experience subdued performance due to unfavorable macroeconomic conditions and the introduction of new production capacities.
Reliance's digital business, which is poised to benefit from a dominant position in the 5G market, is expected to prioritize expanding its customer base over increasing revenues per user. This strategy is anticipated to lead to further market consolidation. On the retail front, the analyst acknowledged the current lack of macroeconomic support.
The report also touched on the future of Reliance's new energy ventures, projecting a gradual growth trajectory as the related technologies mature. This slow ramp-up is likely to keep the company's stock price within a certain range in the near term.
The HSBC analyst also revisited the digital business segment, considering the increasing likelihood of a three-player telecom market. This scenario is expected to necessitate another mobile tariff hike in the fiscal year 2027 and could lead to significant market share gains for Reliance in the broadband sector through its air fibre offerings.
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