The stock rebound comes as analysts highlighted that supply disruptions in the Middle East could lift refining margins, with diesel cracks already surging to $35-42 per barrel in recent days from around $20 per barrel earlier, leading to a potential windfall for the Mukesh Ambani-led conglomerate’s oil-to-chemicals business.
“Every US$ 1/bbl higher refinery margin benefits Reliance’s Ebitda by US$ 500mn annualized (2% of consol Ebitda for FY27),” Jefferies said in a note, adding that a blockade of the Strait of Hormuz could disrupt 2-3 million barrels per day of refined products, or 2-3% of global demand.
The brokerage said damage to Saudi Arabia’s Ras Tanura refinery could lead to supply disruptions and higher refining margins, though it cautioned the benefit depends on whether the government reimposes windfall taxes on diesel and petrol.
JM Financial said the recent 8% decline in Reliance shares over the past month was excessive, arguing the company won’t be negatively impacted by the spike in crude and liquefied natural gas prices. Instead, the firm expects near-term benefits from the jump in diesel cracks and a likely rise in petrochemical margins.
“Assuming diesel crack sustains at ~USD30/bbl, RIL‘s GRM could rise by USD 4-5/bbl. Every USD 1/bbl rise in RIL’s GRM on an annualised basis results in an increase in its annual EBITDA by INR 45bn or 2.2% and increase in valuation by INR 29/share of 1.7%,” JM Financial said, referring to gross refining margins.
The brokerage noted Reliance’s refinery has a high diesel yield of 40-50%, positioning it to capture gains from elevated diesel cracks. However, it acknowledged the abnormally high spreads may not be sustainable and could be subject to government intervention through windfall taxes, similar to measures taken during the Russia-Ukraine crisis when the government capped diesel and petrol cracks at around $20 per barrel.JM Financial also highlighted that Reliance could see margin expansion in its petrochemicals business, as product prices typically rise alongside crude while feedstock costs remain relatively stable. The company has limited dependency on crude-linked naphtha, with its petrochemical feedstock comprising approximately 25% ethane, 50% off-gases, and only 25% crude-linked naphtha.
“At CMP, RIL is trading near our bear-case valuation of ~INR 1,275/share,” JM Financial said, maintaining its buy rating with an unchanged target price of Rs1,730. The firm attributed the recent correction largely to foreign institutional investor selling, with FII holdings declining to 21.1% at the end of December 2025 from a peak of 28.3% in March 2021.
The brokerage said current valuations adequately factor in near-term weakness in the retail business due to quick commerce competition but don’t discount the 15-16% EBITDA growth story in the digital business over the next 2-3 years. At current levels, Reliance trades at 16.8 times fiscal 2028 estimated price-to-earnings, below its three-year average of 23.9 times, and 8.2 times fiscal 2028 estimated enterprise value-to-EBITDA versus a three-year average of 11.9 times.
Key near-term triggers include Jio’s initial public offering in the coming months and a likely telecom tariff hike following the listing, JM Financial said.