Global investment banking firm Jefferies has slashed the target price of India’s petrochemical giant Reliance Industries from Rs 1,820 to Rs 1,750 per share, a cut of over 3.8 percent.
The brokerage cited the probable delay in the initial public offering (IPO) of Reliance’s telecom arm Jio. This may postpone the tariff hike expected before the listing, according to a report by The Economic Times.
However, Reliance’s oil-to-chemicals business is set to gain from the ongoing energy crisis due to the war in West Asia, the brokerage said. It has lowered Jio’s FY27 and FY28 EBITDA (earnings before interest, taxes, depreciation, and amortisation) estimates by 10 percent and 6 percent, respectively.
This was done as the expected tariff increase will now take place in December this year which was earlier anticipated to be in June.
“We cut our FY27-28 revenue and EBITDA estimates by 5-10 percent as we shift our tariff hike assumptions from Jun-26 to Dec-26,” the brokerage was quoted as saying in the report.
The looming jump in inflation and a delayed gazette notification of minimum stake float were cited as the reasons for shifting the tariff hike timeline.
“First, the potential rise in inflation due to rising energy prices may impact telcos’ ability to take up tariffs. Second, the final gazette notification for the minimum 2.5 percent float for large IPOs is still awaited. This could potentially delay Jio’s IPO beyond 1HCY26, which in turn could delay tariff hikes,” it said.
Despite this, Jio may deliver up to 16 percent CAGR growth in revenue and 20 percent CAGR rise in EBITDA over FY26–28, Jefferies said. With this, Jio would be valued at an enterprise value of $144 billion based on 13 times FY28 EBITDA.
While the New York-headquartered investment banking firm has cut the target price of Reliance, it still maintains the ‘buy’ rating on the stock.
The scrip was trading at Rs 1,382 apiece, implying an upside of over 26 percent to the new target price.
