Reliance’s share price extended gains for the third straight session on Friday morning after a global brokerage firm maintained its positive outlook on the stock.

What Happened: The surge today comes as UBS maintained its “buy” rating for the stock raising the target price to ₹3,420 from ₹3,000. The revised target indicates an around 17% upside from the stock’s last closing price of ₹2,901.95.

The global brokerage firm expects a potential turnaround in Reliance Industries’ earnings trajectory following two consecutive years of downward revisions. As per the analysts, these revisions were primarily driven by underperformance in the consumer businesses, falling short of market expectations.

UBS points to factors such as the likelihood of tariff hikes for Jio, robust subscriber additions, and sustained growth in retail revenue and margin expansion as catalysts for a potential reversal in the earnings revision trend.

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The brokerage firm forecasts that Reliance’s consumer business could contribute approximately 85% of the company’s incremental EBITDA over the period from financial year 2024 to 2026.

Furthermore, UBS has revised upward its revenue and EBITDA estimates for Reliance’s core retail business by 1% and 4% respectively for financial years 2024 to 2026. This adjustment is attributed to the gradual improvement in discretionary spending, favourable raw material prices, and a strategic focus on promoting premium products within grocery stores.

The brokerage also expects Reliance Industries to reduce its debt burden by approximately $10 billion over the next two years. This reduction is expected to be facilitated by stronger earnings generating sufficient cash to fund capital expenditure requirements.

Earlier in the week, Motilal Oswal also maintained its “buy” rating on the conglomerate with a price target of ₹3,210.

Price Action: Reliance’s share price was up % to trade at ₹ as the markets opened on Friday.

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