Stock to Buy: Motilal Oswal brokerage firm has maintained its 'Buy' rating on Reliance Industries Limited (RIL). The firm has set the target price of the stock at Rs 1,215 in the base case, while in the bull case, the stock price is estimated to reach Rs 1,930 with a potential rise of 55%.

Past performance and recent decline
Reliance Industries shares have been underperforming the broader market indices over the past few years. The company's shares delivered negative returns in calendar year 2024 (CY24), for the first time in the last 10 years.

According to Motilal Oswal, the main reason for this decline in performance is growth moderation in Reliance Retail and weak refining and petrochemical margins. After a massive 17% decline in the last 6 months, the brokerage believes that the current risk-reward profile has become attractive. The brokerage

has stated in its report that the current valuation of the stock is based on its bear case. Reliance Jio (RJio) is valued 10% lower than Bharti Airtel's current value.

The firm expects high-single digit growth in core retail revenue and EBITDA over the next three years (FY24-27), while earnings from O2C (oil-to-chemicals) have not shown any improvement. Future prospects
 

• Motilal Oswal highlights the following aspects that are currently underappreciated:
• Reduction in the intensity of capital expenditure.
• Potential free cash flow (FCF) of ₹90,000 crore during FY24-27E
• Deleveraging of the Balance Sheet

Key factors for the company
 

• 1. Launch of Gigafactories in the New Energy segment by end of FY25.
• 2. Possible listing of Reliance Jio in the second half of CY25.
• 3. Reliance Retail's growth to improve by FY26.