Reliance Industries Gets ‘Buy’ Rating as O2C Margins Rise

India’s largest conglomerate Reliance Industries Limited is navigating a volatile global energy environment as geopolitical tensions reshape supply chains and influence refining margins. Brokerage firms Jefferies and Motilal Oswal Financial Services have reiterated a “Buy” rating on Reliance Industries, setting a target price of ₹1,750 per share, citing strong performance prospects for the company’s Oil-to-Chemicals (O2C) segment amid disruptions in Middle Eastern energy markets. Analysts suggest that tightening supply conditions in global refining and petrochemical markets could support improved margins for Reliance’s O2C business, though potential regulatory changes such as export duties on fuels remain a key risk.

Key Metric	Details
Company	Reliance Industries Limited
Brokerage Ratings	Buy (Jefferies & Motilal Oswal)
Target Price	₹1,750
Key Segment	Oil-to-Chemicals (O2C)
Market Context	Sensex down ~700 points
Nifty Level	Below 23,400
Potential EBITDA Upside	~8.5% by FY27

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Background on Reliance’s Energy Business

Reliance Industries operates one of the world’s largest integrated refining and petrochemical complexes in Jamnagar, Gujarat, which plays a central role in the company’s Oil-to-Chemicals (O2C) segment. The division processes crude oil into refined fuels and petrochemical products used across industries such as plastics, textiles, packaging, and transportation.

The O2C business remains a major contributor to the conglomerate’s overall earnings despite the company’s growing presence in telecommunications and retail. The refining and petrochemical operations benefit from economies of scale, advanced processing technologies, and access to diversified feedstock sources.

Reliance’s ability to process a wide range of crude grades gives it flexibility in sourcing raw materials and optimizing refining margins, especially during periods of global supply disruption.

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Analyst Views from Jefferies and Motilal Oswal

Global brokerage Jefferies has maintained a Buy rating on Reliance Industries, highlighting that ongoing geopolitical disruptions have tightened refining and petrochemical supply globally. These conditions have led to elevated refining margins and improved spreads for petrochemical products, directly benefiting companies with large integrated refining operations.

According to Jefferies analysts, the current environment of constrained supply and steady global demand could support stronger earnings growth for Reliance’s O2C segment in the near term.

Similarly, analysts at Motilal Oswal Financial Services (MOSL) have reiterated their positive outlook on the stock. MOSL noted that geopolitical tensions affecting energy-producing regions are tightening supply conditions, which could support refining profitability. The brokerage estimates that if such disruptions persist, Reliance could see an 8.5% increase in EBITDA by FY27 from the O2C segment alone.

Both brokerages believe that the company’s integrated refining model and diversified feedstock mix position it well to benefit from favorable industry dynamics.

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Impact of Global Supply Disruptions

The energy sector has recently experienced volatility due to geopolitical tensions affecting oil-producing regions, particularly in the Middle East. Disruptions in global supply chains can reduce the availability of refined products and petrochemicals, leading to higher margins for companies with significant refining capacity.

In such scenarios, companies capable of processing different grades of crude oil often gain a competitive advantage. Reliance’s refining complex can process heavy, sour crude as well as lighter grades, enabling the company to optimize production costs and capitalize on price differentials.

Additionally, supply disruptions can increase petrochemical spreads, which represent the difference between the cost of raw materials and the price of finished petrochemical products. Higher spreads typically translate into improved profitability for integrated refining companies.

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Potential Regulatory Risks

Despite the positive outlook for refining margins, analysts caution that regulatory developments could influence Reliance’s earnings trajectory. One key risk highlighted by brokerages is the possible re-introduction of export duties on refined fuels, a policy tool previously used by the government to control domestic fuel prices.

If export duties are reinstated, refining margins could face pressure as companies may have to absorb additional costs when selling fuels overseas. This could partially offset the benefits of elevated global refining spreads.

Regulatory changes in the energy sector often aim to balance domestic fuel supply and price stability with the profitability of refining companies. As a result, market participants remain cautious about potential policy shifts that could impact refining exports.

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Market Performance and Valuation

Reliance Industries’ stock has experienced volatility in recent sessions as broader market indices have corrected. The BSE Sensex recently declined by around 700 points, while the Nifty 50 slipped below 23,400, reflecting broader investor caution.

Despite this market weakness, analysts note that Reliance shares are currently trading one standard deviation below their long-term valuation average, suggesting that downside risk may be limited. This valuation gap could attract long-term investors seeking exposure to India’s largest private-sector enterprise.

Reliance’s diversified business model—spanning energy, telecommunications, and retail—also provides earnings stability compared with companies focused solely on a single industry.

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Industry Context

The global refining and petrochemical industry has faced significant volatility over the past few years due to shifting demand patterns, supply disruptions, and energy transition policies. While demand for refined fuels remains strong in many developing economies, the sector must also adapt to long-term changes driven by decarbonization initiatives and renewable energy adoption.

Petrochemical demand, however, continues to grow as plastics, synthetic materials, and industrial chemicals remain essential to manufacturing and consumer products worldwide. Companies with integrated refining and petrochemical capabilities are therefore well positioned to capture value across the energy supply chain.

Reliance’s scale and technological capabilities place it among the leading players in this global industry.

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Outlook for Investors

Looking ahead, investors will closely monitor developments in global energy markets and potential regulatory changes affecting refining exports. Sustained geopolitical disruptions could continue to support higher refining and petrochemical spreads, providing earnings tailwinds for Reliance’s O2C segment.

However, policy interventions or a sudden normalization of supply conditions could reduce margins, making the outlook more uncertain. Market participants will also track the performance of Reliance’s other businesses, including telecom and retail, which remain key drivers of long-term growth.

For now, brokerage firms maintain a constructive view on the stock, suggesting that current valuations and supportive industry dynamics provide a favorable risk–reward profile for investors.

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