The global brokerage said it has lowered Jio’s FY27 and FY28 EBITDA estimates by 10% and 6%, respectively, after shifting its expected tariff increase from June 2026 to December 2026. “We cut our FY27-28 revenue and EBITDA estimates by 5-10% as we shift our tariff hike assumptions from Jun-26 to Dec-26,” the brokerage noted, citing both macro and regulatory factors.
Jefferies flagged two key reasons for the push-out: “First, the potential rise in inflation due to rising energy prices may impact telcos’ ability to take up tariffs. Second, the final gazette notification for the minimum 2.5% float for large IPOs is still awaited. This could potentially delay Jio’s IPO beyond 1HCY26, which in turn could delay tariff hikes.”
Despite the cut, Jefferies still expects Jio to deliver a robust 16% revenue CAGR and 20% EBITDA CAGR over FY26–28, valuing the telecom arm at an enterprise value of $144 billion based on 13 times FY28 EBITDA.
The changes to the Jio assumptions, together with updated segment forecasts, have led Jefferies to revise its sum-of-the-parts (SoTP) based fair value for RIL modestly lower. The brokerage now pegs Reliance’s consolidated equity value at Rs 1,750 per share, versus its prior target of Rs 1,820, even as it maintains a “Buy” rating on the stock. RIL shares were at Rs 1,391.10 at the time of the report, implying about 25% upside to the new target price.
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Offsetting the drag from Jio is a sharp earnings upgrade for the O2C business, where Reliance’s scale and sourcing flexibility are allowing it to capitalise on a spike in refining and petrochemical spreads following the blockade of the Strait of Hormuz.
“O2C is benefiting from ME supply disruptions that have led to a sharp jump in refining and petchem spreads,” Jefferies wrote, adding that it expects “elevated spreads sustaining over the period of the conflict” and has built “higher margins in 1HFY27.”According to the report, crack spreads across key products have surged as the supply of crude and refined products to Europe and Asia has been disrupted, and petrochemical feedstock flows from the Middle East have been severely hindered. Jefferies’ calculations suggest that “GRM/petrochemical margins are up 35%/25% respectively since the conflict started,” helped by refinery shutdowns, run cuts and force majeures across Asia and the Middle East.
The analysts argue that Reliance’s ability to secure Russian crude and diversify sourcing routes, along with its planned greenfield refinery investment in the US, should help it maintain operating rates and monetise the stronger margin environment, even at the cost of higher freight.
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On the back of these dynamics, Jefferies has raised its FY27 O2C EBITDA assumptions, which in turn drive a 2% upgrade to FY27 consolidated EBITDA despite the Jio cuts.
“We raise O2C Ebitda in FY27E, assuming strong refining and petchem margins sustain in 1QFY27 and fade gradually over the rest of the fiscal year. Our FY27 consol Ebitda rises 2% despite the cut in Jio’s earnings,” the report said.
Jefferies also underscores the defensive appeal of RIL amid heightened market volatility, noting that the stock is trading about one standard deviation below its long-term forward EV/EBITDA average, which “suggests limited downside amidst earnings support.”
The brokerage’s SoTP framework as of March 2027 assigns 8 times EV/EBITDA to the core energy (refining and petchem) business, 13 times to telecom and 28 times to the core offline retail franchise, and also builds in value for new energy, media and other emerging segments.
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“Stock trades 1 SD below LT avg, suggesting limited downside amidst earnings support. Buy PT Rs 1,750,” Jefferies concluded, arguing that while the Jio IPO overhang and delayed tariff triggers temper near-term upside on the digital side, the O2C windfall from global supply disruptions and steady growth in retail and upstream keep Reliance well positioned as a defensive large-cap in the current environment.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)