Reliance Industries Faces Rocky Start to 2026 with Major Market Cap Loss
Reliance Industries Ltd has stumbled at the beginning of 2026. The company witnessed a significant drop in its market capitalisation, losing nearly Rs 1.4 lakh crore. This sharp decline follows a strong performance in 2025, where the Mukesh Ambani-led conglomerate saw its shares surge by 29% and outperform the Nifty index.
So far this year, Reliance's stock has fallen by about 7%. Investor sentiment has turned cautious ahead of the company's December quarter earnings announcement scheduled for Friday. Concerns over exposure to Russian crude and slowing growth in the organised retail sector are dragging the stock down.
Brokerages Maintain Positive Outlook Despite Near-Term Challenges
Most brokerages continue to view 2026 as a year filled with multiple triggers for Reliance. They expect the upcoming quarterly results to showcase robust performance in the energy business, even as the retail sector faces pressure.
Morgan Stanley's analyst Mayank Maheshwari commented, "RIL's upcoming quarter will see energy shine with retail bumpy. Earnings trajectory remains robust and the path for multiple catalysts every quarter is in play. Consumer retail could drag stock performance near term."
The brokerage anticipates December quarter EBITDA to grow 10% year-on-year. This growth is primarily driven by a 16% increase in the oil-to-chemicals business, benefiting from favourable refining conditions. However, profit growth might be limited to just 1% due to higher depreciation and interest costs, particularly in the telecom segment.
Retail Growth Expected to Moderate in December Quarter
Reliance Retail is likely to experience slower growth during the December quarter. Goldman Sachs has revised its sales growth estimate down to around 10% year-on-year. This marks a significant drop from the 21.3% growth recorded in the September quarter.
Goldman analyst Nikhil Bhandari explained, "In line with trends seen at the peer companies, we expect moderation in 3Q earnings growth in retail due to weak discretionary spend, base effects and festive timing."
Morgan Stanley projects retail growth of 9–10% year-on-year, partly affected by the demerger of the consumer products business. Axis Capital also expects retail growth to slow, citing factors like a higher base, festive timing, GST rationalisation, and the demerger of Reliance Consumer Products.
Limited Impact from Russian Crude Concerns
Regarding worries about exposure to Russian crude, Goldman Sachs believes the impact on earnings will likely be minimal. Bhandari stated, "We see limited impact of these factors on the company's medium term earnings profile. Refining fundamentals remain supported by tight product markets through CY27, while crude differentials across alternative grades (including Middle Eastern barrels) are improving, which could help sustain strong refining margins even in a scenario where Russian crude exposure were to reduce further."
Morgan Stanley also highlighted potential upside from strong refining margins and Venezuelan crude, suggesting these factors could offset some concerns.
2026 Seen as Year of Catalysts for Reliance Stock
Despite near-term pressures, brokerages expect several triggers to boost the stock in 2026. Maheshwari noted, "2026 is a year of catalysts for RIL stock outperformance and the path, as in every cycle, will see speed bumps."
Morgan Stanley maintains an overweight rating on the stock with a target price of Rs 1,847. Jefferies has kept its Buy rating with a target of Rs 1,830, anticipating growth led by the telecom business. Jefferies expects Jio to achieve 22% year-on-year revenue growth in FY27, supported by tariff hikes and expansion in home broadband services.
The brokerage also foresees margin expansion and strong growth in free cash flow. Jefferies added, "In 2026, investor focus will pivot to JPL's imminent listing, the timing and magnitude of further tariff hikes, and the scale-up of its FWA offering."
Axis Capital pointed out that the recent fall has made valuations more attractive. The stock is now trading at a discount to its five-year average. While concerns around retail growth and crude sourcing may persist in the short term, brokerages affirm that the company's long-term outlook remains solid.
