‘Reliance shares still undervalued, strong retail numbers could be next big trigger,' says Gurmeet Chadha

He also said better-than-expected retail performance could be another major trigger for the stock. “We rarely see daily price action in a big stock like Reliance. But it was undervalued for a long time,” he said. Chadha explained that around the time the Jio Platforms IPO came into focus, Reliance Industries’ SOTP valuation was estimated at approximately $300 billion. Even after applying a 20-30 per cent holding-company discount, Chadha said the stock was undervalued by around 20-25 percent on an adjusted valuation basis of $200 billion.

According to him, Reliance Industries’ results for the second quarter of FY27, released on Friday, acted as a catalyst for the recent rally. Acknowledging that Reliance's September-quarter earnings were stronger than expected, particularly in the oil-to-chemicals business, he said, “We were expecting decent performance from the oil-to-chemicals business, and they were really good. From the reported Rs 55,000-56,000 crore EBITDA in the quarter, Rs 25,000-26,000 crore only came from the oil-to-chemicals segment.”

Chadha believes the outlook for refining margins remains supportive in the near-term, given supply disruptions and low diesel inventory levels in key global markets. He added that Reliance's refining capabilities could become particularly valuable amid the prevailing geopolitical uncertainty and disruptions to global energy supply. “In the near term, the refining margins will remain good. At the same time, diesel inventory levels are very low, whether in Europe or the US, and this is more supportive for the cracks.

The markets expect that the refining ability of Reliance amid the ongoing geopolitical situation is going to be a big deal,” he said. Apart from the O2C business, Chadha said Jio’s steady performance and the listing of Jio Platforms have also contributed to the positive sentiment around Reliance Industries. He also believes the conglomerate’s retail business could provide another important catalyst if its performance improves in the coming quarters.

“I also think there will be a big trigger when retail numbers are good. The segment is a little soft currently due to festive season mismatch. If the same action also comes in retail, like we are seeing overall in the quick-commerce and FMCG sectors, it will be more reiterating,” Chadha said. Amid the stock's sharp recent gains, Chadha believes Reliance Industries remains reasonably valued from a large-cap investment perspective. “If we look at it from a large-cap point of view, then the shares are still reasonably valued,” he said.