Reliance Industries is set to benefit significantly from its Jio Platforms unit, with CLSA projecting the telecom business could achieve an enterprise valuation of $190 billion by March 2028. The global brokerage has raised its 12-month target price on Reliance Industries to ₹1,800 from ₹1,650 while maintaining an "Outperform" rating, despite reducing valuation multiples for the conglomerate's retail and new energy segments.

Jio's Path to Global Telecom Leadership

CLSA forecasts Jio's enterprise value progression, expecting it to reach $161 billion by March 2027 before climbing to $190 billion a year later. The brokerage assigns a 15% valuation premium to the average free-cash-flow yield of global telecom peers, excluding China.

The planned Jio IPO by mid-2026, which CLSA describes as "the key event" for the conglomerate, could position Jio among the world's most valuable telecom players. Using a 12-month forward free cash flow yield of 4.60%, the brokerage justifies its bullish projections based on Jio's superior cash generation potential.

Strong Financial Performance Trajectory

Jio's financial metrics are expected to show substantial improvement as 5G investments taper off and cash generation accelerates. The brokerage projects free cash flow to surge dramatically over the forecast period.

CLSA emphasizes that free-cash-flow yield represents the most appropriate benchmark for Jio against global telecom operators, citing divergent accounting practices for spectrum and licenses, as well as Reliance's strategy of front-loading capital expenditure.

Four Key Growth Drivers

The brokerage identifies four primary growth levers that justify Jio's premium valuation multiple:

• Technology Monetization: Partnerships with other operators for Jio's in-house 5G stack and UBR technology
• Broadband Expansion: Large under-penetrated broadband market opportunity
• 5G Migration: Scope to increase ARPU by upgrading users to 5G services
• Customer Engagement: Ability to monetize one of the highest customer-engagement franchises in global telecom

With most 5G capital expenditure front-loaded, Jio is positioned to achieve significant free cash flow generation in the coming years, supporting the aggressive valuation projections.

Portfolio Adjustments and Valuation Impact

Despite the optimistic Jio outlook, CLSA has adopted a more cautious stance on other Reliance business segments following underwhelming third-quarter results. The brokerage reduced the EV/EBITDA multiple for Reliance Retail to 24x from 28x, implying a 10% discount to the equity value at which strategic investors invested over two years ago.

The sum-of-the-parts fair equity value for March 2027 reaches ₹1,798.00 per share, with Jio contributing ₹653.00 and Retail adding ₹466.00 per Reliance share.

Investment Outlook and Catalysts

CLSA's investment thesis centers on Jio and Retail driving material improvement in group EBITDA, with new energy businesses targeted to match the scale of the oil-to-chemicals operations by FY30. The analysts highlight Reliance's conservative valuation in an otherwise extended Indian market, making it an attractive option for large-cap portfolios.

Key share price catalysts over the next 12-15 months include tariff increases at Jio, recovery in Retail's growth momentum, and the potential Jio IPO. The brokerage maintains that these factors support the upgraded target price despite broader market valuation concerns.

Reliance Industries has received a maintained BUY rating from Motilal Oswal, despite posting a softer-than-expected third quarter performance. The brokerage has set a revised target price of ₹1,750 for the conglomerate's shares.

Third Quarter Performance Overview

The company's consolidated EBITDA remained flat on a quarter-on-quarter basis during the third quarter, though it showed positive momentum year-on-year. The performance fell short of analyst expectations, primarily due to challenges in its retail segment.

Reliance Retail Challenges Impact Results

Reliance Retail (RRVL) emerged as the primary factor behind the weaker quarterly performance. The retail arm faced multiple headwinds that affected both revenue growth and profitability metrics during the quarter.

Revenue Growth Factors

RRVL's revenue growth was constrained to 9% year-on-year, significantly impacted by:

• Festive season shift to the second quarter
• Effects of the FMCG demerger
• Market timing challenges

Profitability Pressures

The retail segment's operating EBITDA growth was modest at 2% year-on-year, falling short of the estimated 4% year-on-year growth. Several operational factors contributed to this underperformance:

Analyst Outlook and Recommendation

Despite the challenging third quarter results, Motilal Oswal maintains confidence in Reliance Industries' long-term prospects. The brokerage has reiterated its BUY rating while making a modest adjustment to the target price.

The revised target price of ₹1,750 represents a slight reduction from the earlier target of ₹1,790, reflecting the near-term challenges while maintaining an overall positive outlook on the company's fundamentals and growth trajectory.