---
endpoint: analytics
pattern: Energy
status: done
latency_ms: 199691
conversation_id: 7b47113f-0e51-45bd-82b6-465489009d49
citations: 14
created: 2026-05-31 20:56:48Z
---

# What catalysts could drive upside/downside for Reliance Industries in the next 12–18 months?

# Reliance Industries (RELIANCE IB) — Upside / Downside Catalysts Over Next 12–18 Months

Synthesizing CLSA's "Triggers ahead" note (June 2025, O-PF rating, TP Rs1,650 — 14% upside) [1][3] with management commentary from the most recent Q4 FY26 (March-quarter) earnings call, the catalyst slate for RIL over the next 12–18 months is unusually concrete because (a) Reliance's three-engine model (O2C, Jio, Retail) is at multiple inflection points simultaneously, and (b) management has guided to "doubling Jio/Retail/new energy by FY30," meaning each year of execution either validates or undermines a very specific milestone roadmap [3].

---

## Upside Catalysts

### 1. Jio Tariff Flow-Through and Subscriber Re-Acceleration
- **CLSA's #1 catalyst**: "Flow-through of recent tariff hike for Jio, recovery in retail's growth momentum and Jio Airfiber led positive momentum in broadband subscribers should drive improvements" [1].
- The tariff increase is already in the base — but most of the ARPU benefit still has to flow through as subscribers re-up at the higher rate over coming quarters. RJIL connectivity revenue grew 11.2% YoY with **ARPU up just 4% YoY and no tariff action in the most recent year** [8] — meaning the next tariff event (when it lands) is pure upside.
- Subscriber engine remains live: Jio closed FY26 at **524.4m subscribers (+36.3m YoY adds, with 268m on 5G — the largest 5G base outside China for a single operator)** [7]. Connectivity EBITDA margin expanded **230bps to 56.2%** [8], and JPL EBITDA grew 17.9% YoY to Rs20,060 crore [9].
- **Upside risk per CLSA**: faster Jio subscriber adds beyond their 9–10m/quarter assumption is an explicit upside risk to the TP.

### 2. Jio IPO (12–15 month window)
- CLSA explicitly lists "possible IPO of Jio" as a trigger "over next 12-15 months" [1]. This is the single largest discrete value-unlock event in the SOTP.
- CLSA values Reliance's stake in Jio at **US$71.9bn / Rs454/share** (Jio mobile business EV US$125.5bn at 13.2x EV/EBITDA, in-line with Bharti Airtel multiple) [4]. A public listing would mark Jio's value to market and likely compress the conglomerate discount embedded in RIL's current price.
- The AGM (Aug–Sep 2025) is the venue most likely to formally signal IPO timing.

### 3. Retail Recovery — From "Year-Long Lull" to High-Teens EBITDA Growth
- After FY25 was muted by operational streamlining, CLSA expects retail to **"resume its high-teens Ebitda growth"** from 1QFY26 [3].
- Run-rate is already turning: Reliance Retail's Q4 FY26 revenue hit **a record Rs98,000 crore (+11% YoY, ~14% ex-RCPL demerger)** [9] — Q4 actually exceeded the traditionally seasonal Q3, with the quick-commerce engine growing **avg daily orders +30% QoQ and +300% YoY** [9].
- CLSA models an **18% CAGR in retail revenue to Rs4.6tn by FY27CL** and a **16% retail EBITDA CAGR** [1], and ascribes Rs525/share (US$83.1bn) to the retail stake at 28x FY27 EV/EBITDA — a 10% premium to peers [4].
- Retail valuation has additional optionality from **JioMart hyperlocal quick-commerce expansion, Campa beverages (Rs11,500 crore revenue FY25, fastest-growing FMCG player), and JioStar** monetization.

### 4. New Energy / LFP and BESS Project Starts
- CLSA cites "Start of new energy projects" as a 12–15 month trigger [1], with **US$37.2bn / Rs235/share** of value in the SOTP for new energy (DCF using 6.31x EV/Capex at full scale) [4].
- Management confirmed that "the first phase of 40 gigawatt hour manufacturing of BESS and the battery cell" is "progressing at a rapid pace" — equipment is on site, building construction is advancing, and "progressively we will start commissioning this capacity during the year" [11]. Successful commissioning of LFP cell and BESS lines would make Reliance "one of the largest non-China LFP manufacturer globally" [11] — a material re-rating event.

### 5. O2C — GRM Recovery + Strait of Hormuz Premium
- CLSA notes a **US$1.1/bbl QoQ GRM gain for 1QFY26-TD vs 4QFY25** [3].
- The Middle East supply shock has structurally tightened refining margins: the Hormuz disruption took out an estimated 10 mb/d at peak, drove Dubai crude to US$168 and LNG to US$27/MMBtu, and shut ~3 mb/d of Middle East refining capacity plus another ~3 mb/d in Asia [13]. Reliance's flexibility ("we have processed more than 200 grades of crude oil in our refining system" [13]) and its scale make it a structural beneficiary of dislocated cracks. O2C EBITDA was already up 10% YoY in FY26 despite the volatility [13].
- Tightening sanctions on Russia and structurally tight refining underpin "strong fuel cracks because of supply tightness… throughout the year" [13].

### 6. AGM in Aug–Sep 2025 (Conglomerate Story Refresh)
- The AGM is the standard venue for major capital-allocation announcements — past AGMs have launched Jio (2016), 5G (2021), and new energy plans. CLSA flags this AGM specifically as the likely catalyst for clarity on Jio IPO timeline, quick-commerce scale-up, FMCG expansion, and new-energy project milestones [3].

### 7. Gas Realizations / KGD6
- Indian gas market imports 50–55% of demand as LNG with 60% sourced from Qatar; the Hormuz/Qatar Ras Laffan disruption knocked out 17% of Qatar LNG capacity (2 of 14 trains), which Qatar says "may take them almost five years to bring that back" [12]. With KGD6 selling near its revised **ceiling price of US$8.9/MMBtu**, this supports the upstream EBITDA contribution [12].

---

## Downside Catalysts / Risks

### 1. Downstream Commissioning Delays
- CLSA's #1 risk: **"delays in commissioning key downstream expansion"** [2]. This applies to petrochem expansions and the new-energy gigafactories — execution slippage means deferred revenue and stranded capex.

### 2. Telecom Subscriber Deceleration / Capex Creep
- "Slower-than-expected pace of subscriber additions for telecoms" combined with **"continued increases in telecoms capex"** [2] would compress Jio FCF and rerate Jio's IPO valuation lower.

### 3. Refining and Petrochem Margin Compression
- "Decreased refining and petchem margins" is listed as a primary risk [2]. Petchem margins are already under stress — management noted **"downstream margins were a bit weak"** even as fuel cracks held up [13], and "naphtha cracking margins have been under severe stress" for "last couple of years" [12]. A petchem demand miss (China property/EM weakness) without further refining tailwind would hit O2C.

### 4. Lower Crude Prices
- "Lower crude price" is an explicit downside catalyst [2]. While crude downside helps refining marketers in theory, it compresses upstream KGD6 economics directly and signals weak global demand — usually negative for the O2C complex on balance.

### 5. New Energy Project Delays / Tariff / Trade Restrictions
- "Delay in the start of new energy projects and specific tariffs and restrictions that limit export margins for the new energy business is likely to be a negative event for the stock" [2]. US/EU tariff escalation on Chinese solar/battery exports could backfire on India-origin product economics if Indian producers face symmetrical scrutiny or if domestic incentives are diluted.

### 6. SAED / Fuel Retail Under-Recovery
- The entire DTA refinery is "exposed to the SAED" (Special Additional Excise Duty), with current impact concentrated on diesel [14]. Fuel retail losses on PSU-led under-recovery — RIL has held back from curtailing supplies despite "some pain" [14] — could persist longer if oil prices stay elevated and the government doesn't allow pump-price pass-through.

### 7. Consensus EBITDA Cut Risk
- **CLSA's EBITDA is already 2–3% below consensus** (FY26: Rs1,837bn vs Rs1,870bn consensus; FY27: Rs2,036bn vs Rs2,088bn) [5] and **net profit is materially below** (FY26: Rs754bn vs Rs824bn consensus, FY27: Rs823bn vs Rs942bn consensus) [6]. If consensus marks down to CLSA's numbers as Street models flow through the petchem/SAED dynamics, expect EPS-revision-driven multiple compression.

---

## Catalyst Calendar — Next 12–18 Months

| Window | Event | Direction |
|---|---|---|
| **1QFY26 results (Jul 2025)** | Retail growth recovery test; ~9–10m Jio adds; +US$1.1/bbl GRM | Upside if delivered |
| **Aug–Sep 2025** | AGM — IPO/JioStar/FMCG/new-energy guidance | High-impact swing |
| **2H FY26** | LFP cell + 40 GWh BESS commissioning [11] | Upside if on schedule |
| **FY26 (any quarter)** | Next Jio tariff hike (none in latest year [8]) | Upside |
| **12–15 months out** | **Jio IPO** [1] | Largest single re-rating event |
| **Ongoing** | O2C cracks / Hormuz risk / SAED policy | Two-way |
| **Ongoing** | Petchem margin recovery vs further weakness | Two-way |

---

## Key Valuation Anchor

CLSA's SOTP (Mar-25 fair value Rs1,649 → TP Rs1,650; 27.9x FY27 PE, 12.1x FY27 EV/EBITDA) [4] composition:

| Segment | US$bn | Rs/share | Method |
|---|---|---|---|
| O2C (petchem + refining) | 60.1 | 380 | 8x FY27 EV/EBITDA |
| India upstream | 5.5 | 35 | DCF at 10% US$ WACC |
| **Reliance Jio (Reliance's stake)** | **71.9** | **454** | 13.2x EV/EBITDA |
| **Reliance Retail (Reliance's stake)** | **83.1** | **525** | 28x EV/EBITDA |
| **New Energy** | **37.2** | **235** | EV/Capex + EV/Invested capital |
| Other subs & investments | 8.1 | 51 | Mark-to-market |
| **Total equity value** | **261.1** | **1,649** | |

The **Jio (28% of value) + Retail (32% of value) + New Energy (14% of value)** stack is **74% of fair value** [4] — meaning the catalyst calendar above directly drives ~three-quarters of the SOTP. Consumer businesses already contribute **>55% of consolidated EBITDA** [15], confirming the mix shift away from O2C is structural, not just a CLSA forecast.

---

## Bottom Line

The 12–18 month catalyst path is asymmetric to the upside: the **Jio IPO is the single largest discrete catalyst**, layered on top of (a) tariff flow-through and AirFiber subscriber adds that are already mechanically in motion, (b) retail recovery that began showing in 4QFY26 numbers, and (c) LFP/BESS commissioning that management says is on track. The dominant downside is execution — every catalyst above is also a deliver/miss event — with petchem margins and SAED/under-recovery the cleanest macro tail risks. CLSA's "below consensus on EBITDA and net profit" stance [5][6] is the analytical hedge: even with a constructive Outperform call, the Street has more to mark down than mark up if catalysts slip.

---

**Sources**
[1] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 June 2025) — Catalysts paragraph — 607962717LinqAlpha.PDF
[2] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 June 2025) — Investment risks — 607962717LinqAlpha.PDF
[3] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 June 2025) — Investment thesis — 607962717LinqAlpha.PDF
[4] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 June 2025) — SOTP target price table — 607962717LinqAlpha.PDF
[5] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 June 2025) — CLSA vs consensus EBITDA table — 607962717LinqAlpha.PDF
[6] Reliance Industries — O-PF (Triggers ahead) — CLSA (24 June 2025) — CLSA vs consensus net profit table — 607962717LinqAlpha.PDF
[7] Reliance Industries Ltd., Q4 FY26 Earnings Call, 24 April 2026 — Anshuman Thakur (JPL), subscriber and 5G base disclosure
[8] Reliance Industries Ltd., Q4 FY26 Earnings Call — RJIL EBITDA margin and ARPU disclosure
[9] Reliance Industries Ltd., Q4 FY26 Earnings Call — Dinesh Taluja (Reliance Retail), Q4 record revenue and quick-commerce metrics; JPL revenue/EBITDA
[10] Reliance Industries Ltd., Q4 FY26 Earnings Call — (reserved)
[11] Reliance Industries Ltd., Q4 FY26 Earnings Call — New energy / LFP and 40 GWh BESS commissioning update
[12] Reliance Industries Ltd., Q4 FY26 Earnings Call — Sanjay Barman Roy (E&P), Qatar LNG disruption, KGD6 ceiling price
[13] Reliance Industries Ltd., Q4 FY26 Earnings Call — Srinivas Tuttagunta (O2C), refining environment, Hormuz disruption, Dubai/LNG price spike
[14] Reliance Industries Ltd., Q4 FY26 Earnings Call — SAED exposure / diesel under-recovery commentary
[15] Reliance Industries Ltd., Q4 FY26 Earnings Call — Srikanth Venkatachari (CFO), consumer businesses >55% of EBITDA

## Citations

- [1] **607962717LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962717LinqAlpha.PDF>
- [2] **607962717LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962717LinqAlpha.PDF>
- [3] **607962717LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962717LinqAlpha.PDF>
- [4] **607962717LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962717LinqAlpha.PDF>
- [5] **607962717LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962717LinqAlpha.PDF>
- [6] **607962717LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962717LinqAlpha.PDF>
- [7] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [8] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [9] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [10] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [11] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [12] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [13] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external
- [14] **Reliance Industries Ltd., Q4 2026 Earnings Call, 24-April-2026** · external

