Global investment bank Morgan Stanley has projected that Reliance Industries Ltd (RIL) will see rating upgrades in each quarter of 2026, driven by the company’s diversified business performance and improving cash flows. The brokerage has maintained an Overweight rating on RIL with a target price of Rs. 1,847, suggesting around 20 % upside potential from current levels.
According to Morgan Stanley, RIL is entering a fourth major monetisation cycle as its key verticals — energy, retail and telecom — are expected to turn free cash flow positive for the first time next year. This strong fundamentals backdrop is expected to support sustained re-rating throughout 2026.
The brokerage outlined four key drivers behind its optimistic outlook:
- Refining up-cycle — RIL’s fuel business is benefiting from a favourable global refining environment, with margins near multi-year highs that could add significant value.
- Retail recovery — Reliance’s consumer and retail segment has expanded rapidly, gaining scale and moving towards margin and return-on-capital accretion, supported by quick commerce growth.
- Telecom cash flows — Jio Platforms is expected to generate rising free cash flows as capital expenditure moderates, subscriber growth continues and average revenue per user increases.
- Chemicals turnaround — After a prolonged downturn, margins in the chemicals division are expected to stabilise and recover as industry capacity dynamics improve.
This outlook reflects Morgan Stanley’s view that RIL’s long-term investment strategy — including over $80 billion of capex across sectors — is poised to deliver results from 2026 onwards, unlocking value and supporting sequential upgrades through the year.
