Mumbai

Global brokerage Morgan Stanley has upgraded Reliance Industries Ltd (RIL), citing the onset of what it described as the conglomerate’s “fourth monetisation cycle” and a sharp inflection in cash flows across its energy, telecom and consumer businesses.

In a report titled “Monetisation 4.0”, the brokerage said RIL’s investments of over USD 80 billion since the Covid period are expected to start yielding returns from 2026. For the first time, all three major business verticals are projected to turn free-cash-flow positive simultaneously, which Morgan Stanley sees as a structural trigger for a valuation re-rating.

“This is RIL’s fourth monetisation cycle in 30 years, with energy, consumer and telecom investments all turning free-cash-flow positive,” the report said, adding that the stock has historically outperformed benchmark indices during similar phases.

The brokerage identified refining as a key driver, describing it as RIL’s most underappreciated segment. It said refining margins are tracking near USD 14 per barrel, around 1.5 times mid-cycle levels, and estimated this phase could generate USD 7–10 billion in net asset value.

Telecom is expected to become a significant cash generator as capital intensity declines. Morgan Stanley forecast average revenue per user (ARPU) growth of about 9 per cent annually between FY26 and FY28, driven by subscriber upgrades, broadband growth and AI-led offerings.

Retail growth and a recovery in chemicals were cited as additional catalysts through FY26. The brokerage expects earnings upgrades and re-rating triggers across each quarter of 2026, led by refining, telecom, retail, new energy and chemicals.

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Morgan Stanley also flagged potential upside from investments in AI infrastructure, energy storage and polysilicon, supported by balance-sheet strengthening. It raised RIL’s price target to Rs 1,847.