Reliance Industries Could Reach $100 Billion in Value, Says Morgan Stanley
New Delhi [India], July 1: In its fourth monetization cycle this century, Reliance Industries (RIL) is projected to achieve up to USD 100 billion in value creation, according to a research report by Morgan Stanley. The report suggests that with this level of value creation, as business cycles inflect, new cash flow streams emerge, and multiples catch up, the share price of RIL could surge to Rs 3,540.
Morgan Stanley’s report has set a base case target of Rs 3,540 for RIL, with a potential rise to Rs 4,377 in a bull case scenario. The financial services company attributes this positive outlook to the robust growth momentum expected in RIL. The report highlights that RIL’s fourth monetization cycle is expected to add between USD 60 billion and USD 100 billion to the company’s market capitalization.
This latest cycle, “Monetization 4.0,” is distinctive due to its foundation on a favorable business upcycle, strong domestic demand, and diminished competition. The report added that the concurrent cash flows generated from this monetization phase are being strategically reinvested into emerging sectors such as new energy and chemicals.
Morgan Stanley notes that these investments, coupled with the expansion of RIL’s retail operations to capture market share from the unorganized sector and the repurposing of existing energy businesses, provide a substantial pathway for sustained earnings growth. In the base case scenario, Morgan Stanley has increased its price target for RIL to Rs 3,540 per share, up from the previous target of Rs 3,046.
This valuation is derived using a sum-of-the-parts methodology. The revised EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) forecasts for the fiscal years 2025 to 2027 have been adjusted upwards by 1-6 per cent, reflecting improved profitability in the telecom sector and refining margins. However, these gains are slightly offset by a more gradual growth trajectory in retail.
In terms of the company’s domestic exploration and production (E&P) operations, the report used a forward (Enterprise Value) EV/EBITDA multiple of 6.0x, an increase from the previous 5.5x. This adjustment is due to stabilized gas production and reduced execution risks. Similarly, the forward EV/EBITDA multiple for RIL’s retail business has been increased to 33x from 32x to align with higher industry peer multiples.
In evaluating the e-commerce segment, specifically Jiomart, the report highlights potential for growth in sales. Morgan Stanley asserts that the growth prospects for RIL’s retail division remain robust, driven by expanding demand and the company’s ongoing store expansion. The company’s 66.43 per cent stake in digital investments is valued at an implied EV/EBITDA multiple, with the telecom vertical’s target multiple raised to 11.0x from the previous 9.5x to mirror higher peer multiples.
Additionally, the report assessed the new energy business using an EV/invested capital multiple, reflecting the company’s ramped-up investments and successful acquisition of government production-linked incentives for a 6 GW (Giga Watt) integrated solar supply chain and 5GW battery production. Morgan Stanley incorporates the fiscal year 2025 estimated net debt to account for the annual investments of USD 16 billion. The report stated that the company’s investments are valued based on reported book values and recent acquisitions.
In the bull case scenario, the target value for RIL shares rises to Rs 4,377, up from the earlier projection of Rs 3,696, while the bear case scenario sees an increased share price to Rs 2,573 from the earlier projection of Rs 2,204.
