Reliance Industries picked as ’Stock of the Week’ by Kotak Securities; target price fixed at ₹1,400

Despite being down 20 per cent from its peak, Kotak Securities has recommended a ‘Buy’ rating on Reliance Industries (RIL), setting a 12-month target price of ₹1,400, citing strong growth prospects in retail, telecom, and quick commerce segments. This target implies an almost 10 per cent upside potential from the previous close.

Kotak Expects RIL's Retail Business to Drive Growth

Kotak Securities believes that Reliance Industries' retail business is poised for strong improvement over the next few quarters. The brokerage expects the company to expand its retail area by approximately 60-70 lakh sq. ft in FY26/27, which could significantly enhance its retail footprint.

Additionally, Kotak highlighted that RIL's Jiomart is taking a calibrated approach to quick commerce, which could further strengthen its market position.

Telecom IPO and Tariff Hikes Could Be Key Catalysts

According to Kotak Securities, news flows on telecom business IPO timelines could act as a catalyst for RIL’s stock performance. The brokerage also anticipates a potential tariff hike before the IPO, which could improve profitability.

It further sees a pick up in the pace of net store addition starting FY26, providing further growth momentum.

Earnings Growth Outlook Remains Strong

Kotak forecasts Earnings Per Share (EPS) for RIL to grow by 16.6 per cent in FY26E and by 17.4 per cent in FY27E, driven by expansion across its business segments.

The brokerage noted that RIL's stock has corrected significantly in recent months, making the current levels attractive from a risk-reward perspective.

Stock Price Trend

Reliance Industries' stock has declined by over 12 per cent over the past year and is currently trading more than 20 per cent below its record high of ₹1,608.95, which it hit in July 2024. Earlier this month, the stock touched its 52-week low of ₹1,156.

Despite the broader correction, the stock has rebounded by over 8 per cent in March so far, following a 5 per cent decline in February. In January, the stock had gained 4 per cent, reflecting a gradual recovery after recent volatility.

Financial Performance

Reliance Industries reported a consolidated net profit of ₹18,540 crore in Q3FY25, marking a 7 per cent year-on-year (YoY) growth from ₹17,265 crore in the same period last year. The company’s consolidated revenue stood at ₹2.40 lakh crore, up 6.7 per cent YoY from ₹2.25 lakh crore in Q3FY24.

The company’s earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 7.7 per cent YoY to ₹43,789 crore, compared to ₹40,656 crore in the corresponding quarter last year. The EBITDA margin also saw a slight improvement, rising to 18.3 per cent from 18.1 per cent YoY.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.