Analysts Spotlight Reliance Industries' Major AI Investment Strategy
Morgan Stanley has reaffirmed its overweight rating on Reliance Industries (RIL), setting a target price of Rs 1,803. In a detailed analysis, experts noted that RIL has consistently reinvented itself every decade throughout its nearly 48-year history as a listed entity. The company's ambitious vision to allocate $110 billion over seven years into artificial intelligence, associated energy supply, and digital ecosystems marks its next significant capital reallocation shift.
Breaking Down Reliance's Financial and Operational Plans
This proposed AI investment is comparable in scale to RIL's telecom and consumer investments made between 2014 and 2021. With an annual operating cash flow (OCF) estimated at $14 billion to $15 billion and existing investment commitments, analysts project that $4 billion to $5 billion per year may need to be funded through asset monetization, such as telecom fiber assets, to achieve free cash flow (FCF) breakeven.
Morgan Stanley estimates that RIL's Intelligence business could deliver a post-tax return on capital employed (ROCE) exceeding 12%, which is approximately double the returns from its consumer and telecom investments over the past decade. The $110 billion investment plan is expected to encompass multi-gigawatt data centers, 10GW of renewable energy infrastructure, energy storage solutions, and AI chip development. RIL is scheduled to commence operations with 120MW of capacity in the second half of 2026, with plans to scale up significantly over the following five years, mirroring strategies employed by global industry leaders.
Brokerage Ratings on Other Key Indian Companies
In other market movements, Investec has initiated a buy rating on JSW Cement, setting a target price of Rs 146. Analysts praised the company for its exceptional execution capabilities, cost leadership, and disciplined growth approach, traits synonymous with the broader JSW Group. With a robust capacity pipeline, a structurally advantageous operating model, and untapped group synergies, JSW Cement is well-positioned to rank among India's top fine cement players by FY30. The company also leads the sector in blended cement production and environmental, social, and governance (ESG) standards.
Lenskart's Growth Trajectory and Valuation Insights
Motilal Oswal Financial Services has issued a buy rating for Lenskart, with a target price of Rs 600. Analysts highlighted that Lenskart has established strong competitive advantages in a challenging retail category. However, near-term free cash flow (FCF) generation is expected to be constrained by upfront capital expenditure for the upcoming Hyderabad facility. FCF improvements are anticipated beyond FY28. While Lenskart's valuation commands a premium compared to other leading retailers, analysts deem this justifiable given its market position and growth potential.
Cautious Outlook for United Spirits and ITC
Macquarie has assigned an underperform rating to United Spirits (USL), with a target price of Rs 1,350. Analysts observed that Pernod India reported sales growth of approximately 5% in the October-December 2025 quarter (Q3FY26). In contrast, United Spirits achieved a 10% sales growth over the six-month period ending December 2025, outperforming Pernod India's 8%. Despite marginal market share gains in the December quarter, concerns persist due to inflationary pressures on bulk scotch prices and a muted volume growth outlook following tax hikes in Maharashtra.
HSBC has maintained a hold rating on ITC, with a target price of Rs 360. Market checks indicate that ITC has implemented price increases of 20-30% on a portion of its portfolio to counter higher taxes. Analysts suggest that while downside risks are limited, there is a noticeable absence of immediate upside catalysts for the stock.
Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips provided by experts are their own. These opinions do not represent the views of The Times of India.
