Reliance Industries: UBS Maintains 'Buy' Rating, Foresees Strong Recovery in Oil-to-Chemical Earnings

Swiss investment bank UBS has maintained its 'Buy' recommendation for Reliance Industries, assigning a target price of ₹1,820 per share. The core of UBS's optimism lies in expected strong refining trends that are poised to drive a recovery in Reliance's oil-to-chemical (O2C) segment earnings. The brokerage noted that current Singapore benchmark margins may not fully reflect the profitability of diesel-heavy refiners like Reliance. Furthermore, Reliance's diversified crude sourcing strategy is seen as a key factor in mitigating the impact of geopolitical volatility on its margins. UBS forecasts a substantial increase in O2C EBITDA, projecting it to rise from ₹29,500 crore in the first half of FY26 to ₹34,000 crore in the second half, and further escalating to ₹64,800 crore in FY27. This positive outlook is echoed by the broader analyst community, with 36 out of 38 analysts covering Reliance Industries also holding a 'Buy' recommendation.

Impact
This news is highly impactful for Reliance Industries' stock performance and can positively influence the broader Indian stock market due to Reliance's significant weightage in indices like the Nifty 50. The target price suggests considerable upside potential, which could attract investor interest.
Rating: 8/10

Difficult Terms

• O2C (Oil-to-Chemical): This segment refers to the process where crude oil is refined into various petrochemicals and chemical products. It represents a key business vertical for Reliance Industries.
• EBITDA: Stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance, indicating profitability from its core business operations before accounting for financing, tax, and non-cash expenses.
• Singapore benchmark margins: These are industry-standard indicators used to gauge the profitability of oil refining operations, particularly in the Asia-Pacific region.
• Geopolitical volatility: Refers to instability and unpredictability in international relations, political events, or conflicts that can affect global markets, including oil supply and prices.
• Refining trends: Refers to the current patterns and directions of activity and profitability within the oil refining industry.