Few companies in the Indian stock market command as much influence and investor affection as Reliance Industries Limited (RIL). For decades, Reliance has symbolized growth, wealth creation, and market leadership. Whenever discussions about big names on Dalal Street arise, Reliance is inevitably one of the first mentioned. But as of the latest Q1 results, a crucial question dominates market chatter: Is Reliance headed for a rough patch or is this a golden opportunity for massive gains?
Recent Performance and Market Reaction
On the day after its Q1 results for 2025–26, Reliance shares fell by 3.5%, closing at ₹1,423 on the BSE. This sharp drop reflected market disappointment—the results did not inspire the growth confidence many analysts and investors had anticipated. Even as the stock declined, Reliance’s vast investor base and its weight in the Nifty index kept this debate front and center for market participants.
What Disappointed the Market?
- The Q1 results did not display the expected momentum in growth and profitability.
- Analysts highlighted subdued performance in two major segments: energy and consumer retail.
- Energy, Reliance’s traditional cash cow, fell short of growth expectations.
- Retail’s revenue growth was much less than hoped, raising concerns about future expansion.
While the results weren’t disastrous, they underwhelmed relative to the market’s high expectations for continued rapid acceleration in both revenue and profits.
Mukesh Ambani’s Bold Vision
Despite current skepticism, Mukesh Ambani’s leadership remains a key factor for investor confidence. His declared ambition: to double Reliance’s earnings by 2029. This statement maintains a level of optimism and gives long-term investors a reason to stay engaged, keeping hope alive for a significant turnaround or new growth spurt.
Brokerages: A House Divided
The Q1 results triggered mixed reactions from leading brokerages—some flashing caution, others remaining optimistic:
- Kotak Equities downgraded RIL from ‘Buy’ to ‘Add’. In practical terms, this means it’s recommended to either hold or accumulate the stock on dips rather than aggressively buy at current levels. Their target price was cut from ₹1,650 to ₹1,520, citing rich valuations and limited near-term upside after an already strong run-up in 2025.
- JP Morgan and Jefferies upgraded their target prices by 8% and 5% respectively, showing a more upbeat medium-term outlook.
- Of the 27 brokerage firms covering Reliance, 7 have target prices above ₹1,700, with the highest being Novama at ₹1,767. Others with higher targets include Axis Capital, Jefferies, BNP Paribas, Goldman Sachs, and JM Financials.
- On the bearish end, Ambit stands out with a highly cautious ‘Sell’ call, predicting a target as low as ₹1,300.
Most brokerages, however, still maintain a ‘Buy’ or ‘Add’ recommendation—meaning institutional sentiment, while less euphoric, is still overall positive.
Analyst Concerns and Silver Linings
Key Concerns Highlighted:
- The energy business’s income shortfall was chalked up primarily to temporary factors such as supply chain bottlenecks for cheap crude oil and high costs related to fuel oil. Analysts, especially from Morgan Stanley, expect these headwinds to subside soon, potentially leading to a sharp bounce-back in upcoming quarters.
- Retail growth slowdown is attributed more to a deceleration in expansion rather than outright revenue decline, signaling that growth is merely lagging, not reversing.
- Jio, Reliance’s telecom arm, continues to deliver robust numbers. However, its gains were offset by weaker retail and energy performances in the latest results.
Reasons for Optimism:
- Major brokerages see temporary pressures on energy margins, with expectations of recovery in the July–September quarter.
- New Energy divisions (like green energy businesses) are seen as a major future catalyst, with the potential for sudden, significant positive surprises.
- The median brokerage target price is about ₹1,640—15% upside from current levels—though those numbers gloss over the wide range of underlying opinions.
What Should Investors Watch Next?
All eyes are now on the upcoming Annual General Meeting (AGM) in the next two months. Historically, Mukesh Ambani’s AGM speeches have been occasions for pivotal announcements—sometimes altering the company’s and stock’s trajectory.
Key topics for the AGM:
- Updates on the FMCG venture and whether there will be any demergers or creation of new, focused companies.
- Expansion and growth plans for the New Energy business.
- Potential news on the media segment’s expansion.
- Strategies to accelerate retail growth after a period of sluggishness.
- Jio’s next phase: Subscriber growth, new product launches, and most critically, hints about a long-awaited Jio IPO or listing.
- The sustainability of strong momentum across businesses, as anticipated by Bank of America Securities and CLSA.
Strategic Dilemma: Hold, Buy More, or Sell?
Investors face a typical “mixed bag” situation. Short-term results have disappointed, but long-term possibilities remain promising if Ambani can deliver on his vision for new energy and digital play.
What can you do?
- Conservative investors may choose to wait for greater clarity at the AGM.
- Aggressive investors could accumulate at current dips, banking on leadership, future growth, and strategic pivots.
- A minority, following ultra-cautious brokerages, may decide it’s time to take some profits or trim exposure in light of lesser near-term upside.
Whichever camp you fall into, one thing is certain: Ignoring Reliance is impossible for anyone invested in the Indian equity story!