Morgan Stanley notes Reliance Industries earnings to grow 11% CAGR over FY25-28

Mumbai (Maharashtra) [India], October 31 : Reliance Industries Ltd (RIL) is expected to post an 11 per cent compound annual growth rate (CAGR) in earnings between FY25 and FY28, supported by strong performance across its key businesses, according to a latest research report by Morgan Stanley.
Morgan Stanley said the growth will be driven by three key factors, improved oil-to-chemicals (O2C) margins supported by lower feedstock prices and a tightening refining cycle, strong traction in consumer brands boosting retail, and expected tariff hikes in telecom.
It stated "We expect RIL to see 11 per cent earnings CAGR over F25-28e"
In its base case, Morgan Stanley has valued RIL's different business segments as follows, Petrochemicals and Refining at 8x and 7.5x FY27 EV/EBITDA, respectively, in line with global peers; Retail at 32x FY27 EV/EBITDA; Domestic exploration and production (E&P) at 5x; and Telecom at 13x FY27 EV/EBITDA.
The brokerage has also valued RIL's new energy investments at an enterprise value of USD 25 billion.
The base case assumptions include a core gross refining margin (GRM) of USD 11.2 per barrel in FY27, petrochemical EBITDA margins at USD 206 per ton, and annual investments of around USD 14 billion.
Telecom average revenue per user (ARPU) is projected to reach Rs 236 per month in FY27 as lower-priced plans are rationalised.
In its bull case, Morgan Stanley sees RIL's shares rising to Rs 2,184, assuming 35x FY27 EPS. The brokerage noted that even in a base case scenario the share can hit a target of Rs 1,701, implying further upside potential.
This scenario factors in higher O2C margins, faster pick-up in e-commerce and clean energy, and monetisation of the digital business.
The report also highlighted Reliance's recent partnership with Google Cloud to offer AI services to enterprises.
Under the partnership, RIL will leverage its power and data centre infrastructure to provide compute-as-a-service on Google's TPUs. For the first time, the company has outlined plans to build multi-gigawatt data centres, beyond its earlier 1GW target.
For consumers, Reliance Jio and Google will jointly offer access to the Gemini Pro AI model, 2TB of cloud storage, and other functionalities as part of Jio's 5G plans starting at Rs 51 per month.
The partnership is expected to enhance digital adoption and strengthen RIL's position in India's fast-growing AI and cloud ecosystem.
Morgan Stanley said that Reliance's recent strategic moves, including AI rollout plans, partnerships with Google on TPUs and AI services, and expansion of data centre capacity, mark a significant step in the company's long-term growth and monetisation strategy.