Jio IPO and Tariff Hike Delay Prompt Jefferies to Cut Reliance's Revenue Forecast

Jefferies has reduced its target price for Reliance Industries to ₹1,750 from ₹1,850, citing a likely delay in the planned IPO of Jio Platforms and a postponed timeline for mobile tariff hikes. The brokerage said these factors weaken the near-term earnings outlook for Reliance’s telecom business, though it continues to maintain a “Buy” rating on the stock.

In its report, Jefferies lowered revenue and EBITDA estimates for FY27 and FY28 by roughly 5–10%.

The firm also pushed its assumption for telecom tariff hikes from June 2026 to December 2026, reflecting expectations of slower monetisation in the near term. As a result, it trimmed Jio’s EBITDA forecasts by around 10% for FY27 and 6% for FY28.

O2C Segment to Benefit Amid Disruption

Despite the softer outlook for telecom, Jefferies said other parts of Reliance’s business portfolio continue to provide strong earnings support.

The brokerage highlighted that the company’s oil-to-chemicals (O2C) segment is benefiting from disruptions in West Asia energy supply chains, particularly those linked to tensions around the Strait of Hormuz.

According to the report, refinery run cuts, supply constraints and disruptions to petrochemical feedstock flows have pushed refining and petrochemical spreads significantly higher.

As a result, Jefferies raised its FY27 EBITDA estimates for Reliance’s O2C division, expecting elevated refining crack spreads and petrochemical margins to persist in the near term.

Rise in Freight Costs

The brokerage also noted that while freight costs have increased due to regional instability, Reliance has some flexibility in sourcing crude.

The company can offset part of the supply disruption by importing Russian crude and other non-Gulf barrels, helping sustain operating rates at its refineries. Additional investments, including a proposed greenfield refinery project in the United States, could further diversify feedstock sourcing over time.

Jefferies estimates that gross refining margins and petrochemical spreads have risen sharply since the regional conflict began, helping support Reliance’s consolidated EBITDA even as the telecom segment faces slower growth.

Overall, the brokerage sees a mixed but stable earnings outlook. While delays in Jio’s IPO and tariff hikes could limit near-term upside, stronger O2C profitability and relatively attractive valuations provide downside protection.

Jefferies noted that the stock is currently trading about one standard deviation below its long-term average forward EV/EBITDA multiple.