Synopsis: Morgan Stanley picks Reliance Industries citing a 26% upside. RIL plans a US$110 billion AI-focused investment over seven years, aiming for strong cash flow, high ROCE, and phased rollout from FY26.
The shares of one of India’s largest and most diversified companies, with businesses spanning petrochemicals, refining, telecommunications, retail, and digital services are in the spotlight after Morgan Stanley initiated a target of Rs. 1,803 which is 26% upside from current levels.
With a market capitalisaition of Rs. 19,32,301 cr, the shares of Reliance Industries Ltd closed at Rs. 1,427.90 per share, increasing 0.55% from its previous close of Rs. 1,420.05 per share.
Morgan Stanley on Reliance Industries
Morgan Stanley has singled out Reliance Industries as a “Top Pick,” showing strong confidence in the company’s stock. They recommend keeping an “Overweight” rating, meaning they expect RIL’s shares to outperform the broader market. Their target price of Rs. 1,803 suggests a potential upside of about 26% from current levels.
Big Bets on AI
Reliance Industries is planning a massive US$110 billion investment over the next seven years, focused on AI-driven initiatives. This highlights the company’s shift toward technology-led growth, with artificial intelligence and digital innovation seen as key engines for future revenue and profits.
Rather than funding all of this internally, RIL is expected to form strategic partnerships. This approach spreads the financial risk and allows the company to scale its AI and digital capabilities more efficiently, potentially speeding up project timelines.
Cash Flow and Profitability Outlook
It expects Reliance to generate around US$14–15 billion in annual operating cash flow. Free cash flow could reach breakeven through selective asset monetization selling or leasing certain assets to free up cash.
The AI and intelligence segment is projected to deliver a post-tax return on capital employed (ROCE) of 12% or higher. This indicates that the AI investments are expected to be quite profitable, making the hefty capital spend worthwhile.
Phased Rollout
Reliance has started building multi-gigawatt data centers in Jamnagar, Gujarat, with over 120 megawatts of capacity slated to become operational in the second half of FY26. The expansion will be gradual over five years, allowing the company to scale operations thoughtfully while monitoring technology adoption, efficiency, and market response.
Reliance Industries is one of India’s largest and most diversified companies, with businesses spanning petrochemicals, refining, telecommunications, retail, and digital services. Known for its innovation and strategic investments, RIL is increasingly focusing on technology-driven growth, including AI and digital initiatives, to drive future revenue and profitability.
It reported steady growth in Q3FY26, with sales rising 10% year-on-year to Rs. 2,64,905 crore from Rs 2,39,986 crore. EBITDA increased 5% to Rs. 46,018 crore from Rs. 43,789 crore, while net profit edged up nearly 2% to Rs. 22,290 crore from Rs. 21,930 crore. Earnings per share stood at Rs. 13.78 from Rs. 13.70, reflecting consistent profitability.
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