The global brokerage said it has cut Jio’s FY27 and FY28 EBITDA estimates by 10% and 6%, respectively, after revising the expected tariff hike from June 2026 to December 2026. Dec-26,” the brokerage noted, citing macro and regulatory factors.
Jefferies identified two key reasons for the push-out: “Firstly, the potential rise in inflation due to rising electricity prices may affect the ability of telcos to afford tariffs. Second, the final notice of penalty for minimum 2.5% float for large IPOs is still awaited. This may potentially delay the IPO segment, which is scheduled for 2016 from 2010 to 2016.” The tariff increase may be delayed until the end of the year.
Despite the decline, Jefferies still expects Jio to deliver strong earnings of 16% CAGR and 20% EBITDA CAGR in FY26-28, valuing the telecom arm at $144 billion enterprise value based on 13 times FY28 EBITDA.
Changes in Jio’s assumptions, coupled with updated segment forecasts, have led Jefferies to revise the fair value for RIL on its total-of-parts (SoTP) basis. The brokerage now estimates Reliance’s consensus valuation of Rs 1,750 per share against its earlier target of Rs 1,820, even as it maintains a ‘buy’ rating on the stock. Shares of RIL were at Rs 1,391.10 at the time of the report, indicating a near 25% upside to the new target price.
Offsetting the drag from Jio is rapid revenue growth for the O2C business, where Reliance’s scale and resource flexibility allow it to invest heavily in refining and petrochemical spills after the Strait of Hormuz closure.
“O2C is benefiting from ME supply constraints that have led to a sharp jump in refining and petchem spreads,” Jefferies wrote, adding that it expects “higher spreads to continue during the war” and “set higher margins in 1HFY27.” According to the report, the distribution of kraft products across Asia and the supply of key products in Europe have expanded and kraft products have grown. disrupted, and the flow of petrochemical feedstock from the Middle East was severely disrupted. Jefferies calculations suggest that “GRM/petrochemical margins have risen 35%/25%, respectively, since the start of the conflict,” helped by oil shutdowns, run-downs and forced outages in Asia and the Middle East.
Analysts argue that Reliance’s ability to secure Russian crude and diversify resource routes, along with a planned greenfield refinery investment in the United States, should help it maintain operating costs and cash in on a strong margin environment even with higher shipping costs.
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On the back of these dynamics, Jefferies has raised its FY27 O2C EBITDA estimates, resulting in a 2% upside to FY27 standalone EBITDA despite Jio’s decline.
“We raise O2C Ebitda in FY27E, assuming strong settlement and Paytm margins in 1QFY27 continue and gradually decline over the rest of FY20. Our FY27 console Ebitda rises by 2% despite decline in Jio revenue.” The report says.
Jefferies also points to RIL’s defensive appeal amid market volatility, noting that the stock trades about one standard deviation below its long-term forward EV/EBITDA average, which “suggests limited downside amid earnings support.”
The brokerage’s SoTP framework values 8 times EV/EBITDA to core energy (refining and petchem) business by March 2027, 13 times to telecom and 28 times to core offline retail franchise, as well as new energy, media and other emerging segments.
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“The stock is trading 1 SD below LT average, suggesting limited downside amid earnings support. Buy PT Rs 1,750,” Jefferies concluded, while Jio’s IPO surge and delayed tariffs set near-term mood on the digital side, O2C headwinds and global supply hold back and prevent a rebound. Positioned as a defensive large cap in the current environment.
((rejection: The recommendations, suggestions, opinions and views given by the experts are their own. (It does not represent the views of The Economic Times.)
