Goldman Sachs is raising Reliance Industries’ price target ahead of third-quarter results next week. This is why

Goldman Sachs has raised its 12-month price target for Reliance Industries to Rs 1,835 per share, implying an upside of around 25% from current levels, just a week ahead of the company’s December (Q3FY26) earnings results. The brokerage has reiterated its buy rating, arguing that near-term moderation in retail will be offset by better refinement fundamentals and stable momentum in telecom sector, keeping Reliance’s earnings trajectory intact over the medium term.In a January 9 note, Goldman Sachs said it has refreshed its estimates for Reliance by linking assumptions to evolving trends across segments. Similar to peers, the brokerage expects retail earnings growth to moderate in the third quarter due to weak discretionary spending, base effects and festive timing. However, this is likely to be partially offset by strong refining performance in the oil-to-chemicals (O2C) sector. As a result, overall profits remain largely unchanged despite segment-level adjustments.

Reliance Industries’ stock price has corrected by around 8% in the past few trading sessions after outperforming Sensex, Nifty and peers over the past year. The global brokerage attributes the recent pullback to investor concerns over Reliance’s exposure to Russian crude and softer retail growth momentum. But analysts believe these concerns are overblown and see limited impact on the company’s earnings profile in the medium term. Here’s what the brokerage says about the third quarter.

Refining remains the most important pillar

Goldman Sachs analysts expect O2C EBITDA to rise 11% quarter-on-quarter and 16% year-on-year in Q3 2026, driven by stronger refining revenues that more than offset a sequential decline in petrochemicals. Refinery cracks improved during the quarter due to permanent refinery closures, unplanned outages and disruptions to Russian product exports, tightening global product markets. Lower Dubai-Brent spreads and declining premiums for Saudi crude have also improved cost curve positioning for complex Asian refiners such as Reliance, helping to maintain strong margins even as exposure to Russian crude fell in the third quarter to around 33% of the import mix from 52% in the second quarter. Goldman Sachs expects refining margins to remain supported in the fourth quarter and full year27 given structurally tight capacity and limited net additions globally. The report also points to upside risks in a scenario where Venezuelan crude oil rebounds, noting that Reliance has historically sourced up to 30% of its crude from Venezuela and is well equipped to handle deeply discounted heavy sour grades.

On the other hand, Petchem’s profits are expected to gradually decline due to weaker olefin spreads due to lower oil prices. While Goldman remains bearish on a broader recovery in petchem margins due to structural overcapacity, the firm expects Reliance to continue to outperform its peers thanks to the cost advantage of ethane cracking economics.

Jio to clock healthy numbers

In the telecom sector, Goldman expects a stable quarter with healthy subscriber growth. Jio Infocomm’s Q3 26 revenue stands at Rs 32,900 crore, up 12% year-on-year, with an increase of around 9.5 million subscribers during the quarter. Average revenue per user is expected to rise 1% to Rs 214. For the full year FY26, Goldman forecasts revenue and EBITDA growth of 15% and 20% respectively for Jio Platforms, with non-connectivity businesses growing faster at 30% and now accounting for around 12% of revenue.

Over the medium term, Goldman expects Jio to deliver an EBITDA CAGR of 18% over FY26-30, supported by continued gains in wireless and home broadband subscribers, early capex investments and rising contribution from cloud, content and other non-connectivity services. Jio’s non-connectivity business already generates around $2 billion in annualized revenue and has grown around 30% year-on-year.

Will retail slow down in the third quarter?

The retail branch remains the drag in the short term, the report said. Goldman lowered its revenue growth assumption for Reliance Retail in Q3 2026 from a previous 12% to around 10% annualized, citing the effects of early holiday shopping and a lack of sharp recovery in discretionary demand. EBITDA growth is expected to be around 6% annually, with some margin pressure due to investments in high-speed trading and lower operating leverage. The brokerage has cut its FY26-28 EBITDA estimates by 4-6%, but notes that the stock already discounts an implied retail valuation well below the bear case estimate.Overall, Goldman expects consolidated EBITDA to grow 6% sequentially and 11% year-on-year to around Rs 48,700 crore in Q3FY26. For FY26-28, the company believes that stable energy and telecom performance, together with retail growth in the mid-teens, is sufficient to support consolidated EBITDA growth in the mid-teens.

Introducing JioStar Estimates

Reliance Industries has started reporting JioStar-related data from early CY25, and we are now including this company in our forecasts, the brokerage says. It expects JioStar to achieve a revenue CAGR of 8% and an EBITDA CAGR of 11% during 26-30E. Goldman values ​​JioStar using a DCF methodology, assuming a WACC of 10.5% and a terminal growth rate of 4%, in line with its valuation approach for Jio. This gives a DCF implied valuation of USD 12 billion, which translates into a value of Rs 78 per share for RIL on a 100% ownership basis. Our estimates imply that JioStar is valued at 15x FY27 EV/EBITDA.

Also read: India Inc sees best profit growth in two years, but nine companies may see third-quarter profits fall by more than 50%

The brokerage values ​​core refining and petrochemicals businesses at 8x FY27E EV/EBITDA, and offline retail at 33x December 2027 EV/EBITDA.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)