Goldman Sachs Forecasts a 54% Increase for Reliance Industries Stock

Goldman Sachs forecasts a significant upside for Reliance Industries (RIL), estimating a 54% increase in share price by 2026. This projection is based on favorable factors such as potential gains from the RIL-Disney joint venture and a shift in investment focus towards Retail and New Energy sectors. Goldman Sachs retains its "buy" rating on Reliance Industries, raising the price objective to Rs 3,400 from Rs 2,925 earlier. This updated goal reflects a significant 17% increase over the closing price on Tuesday.

What’s the Deal?

Goldman Sachs maintains "buy" recommendation for Reliance (RIL), raising its price target to Rs 3,400. Firm cites expected value accretion from RIL's joint venture with Disney & forecasts expansion in Cash Return on Cash Invested (CROCI) by 2027.

RIL's recent investment focus has shifted towards less capital-intensive ventures like Retail & New Energy, with expected higher returns. Growth in Retail's EBITD is projected to double by 2027, while New Energy is expected to contribute positively by 2025.

Goldman Sachs anticipates turnaround in RIL's free cash flow by 2025, driven by factors including telecom tariff hike, retail sales growth, & improved chemical margins. Firm forecasts robust EBITD Compound Annual Growth Rate (CAGR) of 17% from 2024 to 2027.

Over the previous decade, Reliance Industries has invested more than $125 billion in capital expenditures, mostly in the hydrocarbon and telecom sectors. However, Goldman Sachs notes a shift in RIL's investment strategy toward less capital-intensive initiatives like retail and new energy, which provide better returns and shorter gestation periods.

To Summarzie

Reliance Industries' shares historically outperform the Indian market during periods of expanding returns. With expectations of rising returns and potential value unlock through listings of consumer businesses, Goldman Sachs predicts a positive trajectory for RIL's shares in the foreseeable future.