Reliance Industries shares jump over 3.5%: What is making the stock attractive?

Reliance Industries Shares Surge Over 3.5%: What’s Driving the Rally?

Shares of Reliance Industries Limited (RIL) witnessed a strong upward momentum on Friday, March 7, 2025, gaining over 3.5% intraday. This surge was largely driven by bullish brokerage reports and an improved outlook on earnings growth, potential spin-offs, and the performance of key business segments.

At 2:40 PM, RIL shares were trading at ₹1,252.95 apiece, reflecting a 3.58% increase on the National Stock Exchange (NSE). The stock was also the biggest contributor to NSE’s gains during the afternoon session.

What’s Driving the Positive Sentiment Around RIL?

Global brokerage firms, including Macquarie Research and Jefferies, have recently provided insights into Reliance’s business trajectory, boosting investor confidence. The key factors fueling optimism include:

1. Incremental Earnings Growth – Higher earnings momentum projected for the upcoming quarters.
2. Potential Spin-Off Events – Possibility of value unlocking through business restructuring.
3. Jio’s Growth Prospects – Subscriber growth, ARPU (Average Revenue Per User) improvement, and EBITDA margin expansion in telecom.
4. Retail Business Turnaround – Expectation of double-digit growth in FY25.
5. Ongoing Debt Reduction – Utilizing stake sale proceeds to pay down group debt and capex liabilities.

Let’s analyze these factors in detail.

Brokerage Firms’ Outlook on Reliance Industries

Macquarie Research’s Bullish Call

Macquarie Research released an upbeat outlook on March 7, predicting better earnings momentum and potential spin-off events that could support RIL’s share price appreciation.

Key takeaways from Macquarie’s note:

• Jio Business Growth: Expectation of mild subscriber growth, ARPU uplift, and EBITDA margin expansion.
• Retail Business Turnaround:
  • While visibility remains low, company guidance suggests a rebound from single-digit growth to 15%+ in FY25.
  • However, further margin expansion may be limited as a higher revenue share is expected from the lower-margin grocery segment.
• Debt Reduction Strategy: Reliance is actively using proceeds from stake sales to reduce debt and clear capex liabilities, improving financial stability.

Jefferies’ Analysis on RIL’s Underperformance

On March 6, Jefferies pointed out that RIL’s underperformance compared to the NIFTY50 was due to:

• Slower growth in the retail segment.
• Muted earnings in the Oil-to-Chemicals (O2C) business.

Despite these concerns, Jefferies sees upside potential, especially if the retail and O2C businesses show stronger recovery in the coming quarters.

RIL’s Stock Performance and Market Trends

Reliance Industries’ stock has been on a recovery path, gaining 5.8% in the last five sessions. However, it still remains 22% below its 52-week high of ₹1,606, which was recorded on July 8, 2024.

Key Stock Performance Metrics

• 52-Week Low: ₹1,156 (hit on March 3, 2025).
• Recent Five-Day Gain: 5.8%.
• Last Six Months’ Performance: Down 12.42% (from September 9, 2024).
• One-Year Performance: Down 15.38% YoY.
• Market Capitalization: ₹16.95 lakh crore.

Despite short-term volatility, brokerages are optimistic about RIL’s medium-to-long-term prospects due to growth in telecom, retail, and energy businesses.

December Quarter (Q3 FY25) Earnings: A Closer Look

Reliance Industries reported a 7.4% increase in net profit for the December quarter (Q3 FY25), supported by:

• Stronger telecom earnings from higher tariffs.
• A recovery in retail business performance.
• Stable performance from the oil and petrochemicals (O2C) segment.

Key Financial Metrics for Q3 FY25

Debt and Financial Position

• Total Debt (as of Dec 31, 2024): ₹3.5 lakh crore.
• Debt Increase from September 2024: ₹3.36 lakh crore.
• Debt Increase from December 2023: ₹3.11 lakh crore.

Despite a rise in debt, Reliance is aggressively managing its liabilities by using proceeds from stake sales, which should ease financial pressure in upcoming quarters.

Growth Drivers for Reliance in 2025

1. Jio’s Expansion and ARPU Growth

• Jio is expected to add subscribers steadily, while higher tariffs will boost ARPU.
• 5G deployment and expansion will further support revenue growth in telecom.

2. Retail Business Rebound

• Revenue growth expected to exceed 15% in FY25.
• Lower-margin grocery segment expansion may limit profit margin growth but will increase overall sales volumes.

3. Oil-to-Chemicals (O2C) Segment Stability

• Crude oil price fluctuations remain a challenge, but RIL’s diverse product mix helps mitigate risks.
• Refining margins are stable, contributing to consistent earnings from petrochemicals.

4. Potential Spin-Offs & Value Unlocking

• Investors anticipate RIL may spin off certain businesses, unlocking shareholder value.
• Jio Financial Services’ demerger in 2023 was a key move, and similar steps could drive stock re-rating.

Conclusion: Is Reliance Industries a Strong Buy?

Reliance Industries’ stock has underperformed in the past year, but recent bullish brokerage reports and strong Q3 earnings suggest a potential turnaround.

Reasons to Stay Bullish on RIL

✔ Earnings growth momentum is expected to improve.
✔ Jio’s ARPU growth and subscriber base expansion will boost telecom revenues.
✔ Retail business is rebounding with double-digit growth projections.
✔ Debt reduction strategy is being implemented through asset monetization.
✔ Potential business spin-offs could create value for shareholders.

Despite near-term stock volatility, RIL remains a long-term growth story with strong fundamentals across telecom, retail, and energy businesses.

Read more news on NiftyNews